France's BNP to pay $9 billion in U.S. sanctions case, face dollar-clearing ban

NEW YORK/WASHINGTON Mon Jun 30, 2014 7:18pm EDT

The logo of BNP Paribas is seen on top of the bank's building in Fontenay-sous-Bois, eastern Paris, May 30, 2014. REUTERS/Charles Platiau

The logo of BNP Paribas is seen on top of the bank's building in Fontenay-sous-Bois, eastern Paris, May 30, 2014.

Credit: Reuters/Charles Platiau

NEW YORK/WASHINGTON (Reuters) - French bank BNP Paribas BNPP.PA on Monday agreed to pay almost $9 billion over charges it violated U.S. sanctions against countries such as Sudan, and faces a one-year suspension of parts of its U.S. dollar-clearing business.

The bank also pleaded guilty to two criminal charges. The bank's general counsel, Georges Dirani, briefly appeared in New York state court to plead guilty to one count of falsifying business records and one count of conspiracy.

U.S. authorities found that BNP Paribas had evaded sanctions against a range of black-listed countries, in part by stripping information from wire transfers so they could pass through the U.S. system without raising red flags.

"Through a series of egregious schemes to evade detection and with the knowledge of multiple senior executives, BNP employees concealed more than $190 billion in transactions between 2002 and 2012," the New York State regulator, headed by Benjamin Lawsky, said in a press release.

No individuals were charged on Monday, but U.S. authorities said they have not wrapped up their probes.

"The case which BNP is pleading to now is against the corporation alone, but our investigation into potential individual culpability is continuing," Manhattan District Attorney Cyrus Vance said in an interview on Monday.

BNP laid out the terms of the $8.97 billion deal in a statement. "We deeply regret the past misconduct that led to this settlement," BNP CEO Jean-Laurent Bonnafe said.

In an unprecedented move, the deal with U.S. authorities also included a suspension of the bank's ability to make dollar payments on behalf of customers in New York, which could trigger a client exodus and hurt revenues.

The bank would need to suspend its so-called dollar-clearing operations through its New York branch and other U.S. affiliates during all of 2015 at the business lines where the misconduct took place, the authorities said.

Some of the business lines affected were dollar clearing on behalf of the oil and gas finance business from Geneva, Paris and Singapore, the trade finance business from Milan, and for oil and gas-related clients from Rome.

During the negotiations, Lawsky had proposed the ban as one condition for not revoking BNP's license to operate in New York, sources had told Reuters.

In addition, the bank will need to prohibit all U.S. dollar clearing as a correspondent bank for unaffiliated third-party banks in New York and London for two years.

Of the total payment, $2.24 billion would go to New York's Department of Financial Services as a civil penalty, and 13 individuals - including Group Chief Operating Officer George Chodron de Courcel - would leave the bank.

"This conduct, this conspiracy was known and condoned at the highest levels of BNP," Assistant District Attorney Ted Starishevsky said.

Dirani, the bank's attorney, told the judge that BNP took steps to evade sanctions between 2004 and 2012 that the United States imposed on Sudan, Cuba and Iran.

French financial supervisor ACPR said in a statement late on Monday that it "has concluded that BNP Paribas Group has a solid solvency and liquidity position, which will allow it to absorb the anticipated consequences of these sanctions."

(Reporting by Joseph Ax in New York and Aruna Viswanatha in Washington; additional reoporting by Nate Raymond in New York, Ingrid Melander in Paris, and Julia Edwards in Washington; Writing by Douwe Miedema; Editing by Karey Van Hall, Sandra Maler and Dan Grebler)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article