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BNP faces record-breaking fine and punishment in U.S. for breaking sanctions

The company dealt with Sudan, Iran, and Cuba over a period of 10 years

BNP Paribas has pled guilty to two criminal charges of breaking U.S. sanctions against trade with Sudan, Iran and Cuba. The bank will be prevented from clearing certain transactions in U.S. dollars for one year from the start of 2015, as well as pay $9 billion in fines.

That sum amounts to one of the largest fines on record, in addition to one of the most severe punishments possible for the French-based bank that uses U.S. trades as an essential money-making arm of its global operations. Reuters notes that the extent of the severity of the fine and punishment is part of the U.S. Justice Department’s crackdown on international financial institutions, their schemes, and money laundering in general, quoting the New York State regulator on the settlement:

"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 for clients subject to U.S. sanctions including Sudan, Iran and Cuba.” 

 

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U.S. authorities found BNP in violation of a number of sanctions, and chastised it for functioning as a central trade vehicle for Sudan — blacklisted for its perpetual engagement in genocide and its corrupt government — in a conspiracy that trickled throughout all executive structures of the company.

The length of the illegal practices, the conscious action thereof, and the previous warnings delivered to the bank by U.S. federal authorities were the contributing factors to the record-breaking fine and punishment. The forced plea of guilty has been seen as the most egregious of requirements for the settlement as it tars the name of the bank. In fact, the New York Times reports that BNP had considered building a subsidiary to plead guilty to avoid brand association. No actual BNP employees have been criminally charged, although 13 employees have been forced out of the company as part of the settlement. 

While this example of corruption is one for international bodies — especially financial ones — to take note of, it bears mentioning that BNP had touted its own compliance system during its condoned dealings with the blacklisted countries. As corruption continues to be a problem for certain institutions, ones of BNP’s magnitude cannot afford such highly-publicized, global setbacks. 

Contributing Author

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Juliana Kenny

Juliana Kenny is a contributor to InsideCounsel.com, covering a range of topics including patent litigation, conflict mineral laws, executive compensation, and antitrust regulation. Juliana earned B.A.s...

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