Tuesday, July 1, 2014

BNP Paribas Agrees to Nearly $9 Billion Penalty

BNP Paribas, a French bank, has pleaded guilty to criminal charges related to breaching U.S. sanctions. Under the terms of the deal, it is reported that BNP Paribas will pay almost $9 billion in penalties.

From CNN:
The settlement concludes a long-running criminal investigation into allegations that BNP Paribas (BNPQF) violated U.S. money laundering laws by helping clients dodge sanctions on Iran, Sudan and other countries.
 The deal between the bank and prosecutors had been expected for months.    Shares in the bank edged higher Monday in Paris, having fallen more than 12% so far this year in anticipation.
 In an agreement with the Manhattan District Attorney Cyrus Vance, the bank pleaded guilty to falsifying business records and conspiracy in Manhattan Supreme Court.  It is expected to plead guilty for violating money laundering laws in federal court with U.S. Attorney Preet Bharara next week.The bank also agreed to a sanction by the New York department of financial services. It will suspend certain U.S. dollar clearing transaction services through its New York branch for one year.  BNP Paribas said it would clear U.S. dollars "through a third-party bank instead of clearing through BNP Paribas New York."
 About 30 employees will leave BNP Paribas as a result of the investigation, including several who have gone already, according to a U.S. official.
The CNN article discusses the severity of the penalty and states:
The severity of the punishment relates to the bank's lack of cooperation over a period of years, said an official who was briefed on the investigation Monday. The bank continued to process transactions that the U.S. says violated the law even after the investigation began.
The entire CNN article is available here

I have previously written about the important role cooperation plays in decisions by the U.S. Department of Justice regarding the prosecution of corporations. Pursuant to the US Attorney's Manual Principles of Prosecution of Business Organization (found here):  
In conducting an investigation, determining whether to bring charges, and negotiating plea or other agreements, prosecutors should consider the following factors in reaching a decision as to the proper treatment of a corporate target:...4.
the corporation's timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation of its agents (see USAM 9-28.700);
For an article discussing this concept further, see the following:

Re-Evaluating Corporate Criminal Liability: The DOJ’s Internal Moral Culpability Standard for Corporate Criminal Liability, 41 Stetson Law Review 7 (2011) (symposium article) - available for free download here

There is also an interesting article in the New York Times about the BNP Paribas case.  The article discusses how a bus bombing two decades ago set in motion a chain of events that led to the prosecution of various banks, including BNP Paribas. From the New York Times article:
The trail that ultimately led to BNP began in 2006, when the Manhattan district attorney’s office came upon a lawsuit filed by the father, who blamed Iran for financing the Gaza bus bombing that killed his 20-year-old daughter. Buried in the court filings, prosecutors found a stunning accusation: a charity that owned a gleaming office tower on Fifth Avenue was actually a “front” for the Iranian government, a claim that the prosecutors later verified.   The prosecutors soon discovered that Credit Suisse and Lloyds, two of the world’s most prestigious banks, had acted as Iran’s portal to the United States financial system. To disguise the illicit transactions — the United States is closed for business to Iran — Credit Suisse and Lloyds stripped out the Iranian clients’ names from wire transfers to the Fifth Avenue charity and affiliated entities. The findings led the Manhattan prosecutors and the Justice Department in Washington to announce criminal cases against both banks.  As those cases were coming to light in 2009, a whistle-blower stepped forward to point the finger at BNP, France’s biggest bank. That tip has now materialized in a landmark criminal settlement, with BNP pleading guilty to criminal charges, capping a sweeping investigation into the bank’s ties to Sudan and Iran.
The entire New York Times article is available here

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