After lengthy negotiations, The U.S. government and BNP Paribas have come to terms on a plea bargain over international money laundering charges.
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On Monday representatives of French bank BNP Paribas appeared in a New York court to enter a plea bargain on money laundering charges related to Iran and other rogue countries. The bank admitted to funneling money through accounts in the U.S. on behalf of Iran and Cuba, which are among a number of many countries that have been blacklisted by the American government for, among other things, ties to terrorist organizations. It will pay a $9 billion fine.
The bank has confessed that between the years 2004 and 2012 it aided in the transfer of $8.8 billion in funds through American financial institutions. $6.4 billion of the funds belonged to the African nation of Sudan which was, at the time, under an embargo for human rights violations and the promotion of terrorism. Its board of directors agreed to the deal in a meeting over the weekend.
Jean-Laurent Bonnafe, the bank’s chairman, said, “We deeply regret the past misconduct that led to this settlement.”
The deal comes almost a year after the bank’s management admitted its illicit activities to U.S. officials in a meeting in New York City. BNP Paribas has maintained ever since that its management had no knowledge of the illegal money transfers and that it was the fault of misconduct on the part of a small group of lower level employees. The bank said that it discovered the transgressions after engaging in an internal probe.
But New York Assistant District Attorney Ted Starishevsky told the court, “This conduct, this conspiracy was known and condoned at the highest levels of BNP.”
At a press conference announcing the deal, American Attorney General Eric Holder said, “BNP Paribas went to elaborate lengths to conceal prohibited transactions, cover its tracks and deceive U.S. authorities.”
Preet Bharara, the U.S. Attorney for the Southern District of New York, added that BNP Paribas, “banked on never being held to account for its criminal support of countries and entities engaged in acts of terrorism and other atrocities.”
New York State Department of Financial Services has also banned the bank from conducting US dollar clearing operations in the State for all of 2015. The New York state banking regulator said that 13 people will leave BNP Paribas as part of the settlement, including its CEO Georges Chodron de Courcel.
The ban on Dollar trading may prove to be a much greater punishment for the bank than the fine since it effectively will not be able to do business in America. Its current clients will all need to find someone else to handle their accounts in America and may never return.
During the negotiations for the plea bargain both French President Hollande and Foreign Minister Laurent Fabius urged American President Obama to intervene as they believed that that the fine demanded by American prosecutors was too high. But President Obama declined to take any action, in spite of diplomatic pressures, saying that it was not his place to interfere with the judicial process.
BNP Paribas is a French bank and financial services company founded in 2000 when Banque Nationale de Paris (BNP) and Paribas merged. It is one France’s largest retail banking networks with 2, 200 branches in that country. The firm also owns many regional banks around the world, including in the United States.
The bank earned $6.5 billion in 2013.