No need for any more in the title – BNP just got whacked for the largest set of civil monetary penalties ever. It's a little deceptive when you first look at OFAC's notice, which only mentions one amount – $893 million that they are receiving. But, if you dig down into Treasury's press release and Attorney General Holder's remarks, you find the real figure – $8.83 billion! Makes the HSBC global settlement of $1 billion+ look like chicken feed, doesn't it?
And, yes, there's a good reason – BNP Paribas went above and beyond to try to evade sanctions – from DOJ's press release:
According to documents released publicly today, over the course of eight years, BNPP knowingly and willfully moved more than $8.8 billion through the U.S. financial system on behalf of sanctioned entities, including more than $4.3 billion in transactions involving entities that were specifically designated by the U.S. Government as being cut off from the U.S. financial system. BNPP engaged in this criminal conduct through various sophisticated schemes designed to conceal from U.S. regulators the true nature of the illicit transactions. BNPP routed illegal payments through third party financial institutions to conceal not only the involvement of the sanctioned entities but also BNPP’s role in facilitating the transactions. BNPP instructed other financial institutions not to mention the names of sanctioned entities in payments sent through the United States and removed references to sanctioned entities from payment messages to enable the funds to pass through the U.S. financial system undetected.
How widespread was the scope of the violations? From OFAC's notice:
…BNPP’s systemic practice of concealing, removing, omitting, or obscuring references to information about U.S.-sanctioned parties in 3,897 financial and trade transactions routed to or through banks in the United States between 2005 and 2012 in apparent violation of the Sudanese Sanctions Regulations, 31 C.F.R. part 538; the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560; the Cuban Assets Control Regulations, 31 C.F.R. part 515; and the Burmese Sanctions Regulations, 31 C.F.R. part 537.
Some detail – from the OFAC enforcement notice:
BNPP processed 2,663 wire transfers totaling approximately $8,370,372,624 between September6, 2005, and July 24, 2009, involving Sudan in apparent violation of the SSR. The total basepenalty for this set of apparent violations was $16,826,707,625. BNPP processed 318 wiretransfers totaling approximately $1,182,075,543 between July 15, 2005, and November 27, 2012,involving Iran in apparent violation of the ITSR. The total base penalty for this set of apparentviolations was $2,382,634,677. BNPP processed 909 wire transfers totaling approximately$689,237,183 between July 18, 2005, and September 10, 2012, involving Cuba in apparentviolation of the CACR. The total base penalty for this set of apparent violations was$59,085,000. BNPP processed seven wire transfers totaling approximately $1,478,371 betweenNovember 3, 2005, and approximately May 2009, involving Burma in apparent violation of theBSR. The total base penalty for this set of apparent violations was $3,952,704.
And the totality of the punishment?
BNPP will waive indictment and be charged in a one-count felony criminal information, filed in federal court in the Southern District of New York, charging BNPP with knowingly and willfully conspiring to commit violations of IEEPA and TWEA, from 2004 through 2012. BNPP has agreed to plead guilty to the information, has entered into a written plea agreement, and has accepted responsibility for its criminal conduct. BNPP is scheduled to formally enter its guilty plea before United States District Judge Lorna Schofield on July 9, 2014 at 4:30 p.m.
The plea agreement, subject to approval by the court, provides that BNPP will pay total financial penalties of $8.9736 billion, including forfeiture of $8.8336 billion and a fine of $140 million.
Not only did BNP not voluntarily self-disclose these activities, they were, pretty obviously, an egregious set of violations. The base penalty was $19,272,380,006.
And here is OFAC's recitation of the horribles (reformatted for clarity):
The following were found to beaggravating factors:
- BNPP had indications that its conduct might have constituted violations ofU.S. law, and therefore BNPP acted with reckless disregard for U.S. sanctions regulations;
- Atleast one member of BNPP’s senior management was aware of the conduct leading to theapparent violations;
- BNPP’s business line management and supervisors were aware, and/or hadreason to know, of the conduct leading to the apparent violations;
- The conduct described aboveresulted from a pattern or practice that spanned many years and multiple BNPP branches andproduct lines;
- The conduct described above conferred significant economic benefit to personssubject to U.S. sanctions and undermined the integrity of multiple U.S. sanctions programs;
- BNPP is a large and commercially sophisticated financial institution; and
- BNPP did not maintainadequate policies, procedures, or internal controls to ensure compliance with the sanctionsprograms administered by OFAC.
Mitigation was extended because:
- BNPP has not received apenalty notice or Finding of Violation from OFAC in the five years preceding the date of theearliest transaction giving rise to the apparent violations;
- BNPP cooperated with OFAC’sinvestigation of the apparent violations by conducting an extensive internal investigation andexecuting a statute of limitations tolling agreement with multiple extensions;
- BNPP tookremedial action in response to the apparent violations described above; and
- A consideration of thetotality of the circumstances warrants further mitigation to ensure an enforcement response thatis proportionate to the nature of the violations.
How can you easily tell this was a big one? Instead of hiding the details behind a number of clicks, the email notification itself noted the amount of the OFAC fine and who got fined. Not to mention, of course, the number of people in the US government crowing about it – see below. I'm sure there are people in NY's enforcement community who are also patting themselves on the back.
Links:
Attorney General Holder's Remarks at Press Conference
US Department of Justice Press Release
Posted with BlogsyFiled under: Burma Sanctions, Cuba Sanctions, Iranian Sanctions, OFAC Updates, Sanctions News, Settlements, Sudan Sanctions
