On May 1, 2015, the world’s fourth largest bank, BNP Paribas S.A. (BNPP) was sentenced to a five-year probation, ordered to forfeit over $8.8 billion to the United States, and pay a $1.4 million fine for conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Trading With the Enemies Act (TWEA). BNPP is a global financial institution headquartered in Paris that knowingly processed billions of dollars in transactions through the United States financial system on behalf of foreign sanctioned entities subject to U.S. economic sanctions. The sentencing, imposed by Judge Lorna G. Schofield of the Southern District of New York, constitutes the first time a financial institution has ever been convicted and sentenced for violating U.S. economic sanctions. The combined forfeiture and penalty resulted in the largest financial penalty ever imposed in a criminal case.
In its guilty plea on July 9, 2014, BNPP admitted to knowingly and willfully moving over $8.8 billion through the U.S. financial system on behalf of Sudanese, Iranian, and Cuban sanctioned entities between 2004 and 2012. Between July 2006 and June 2007, BNPP processed $6.4 billion of the $8.8 billion through the United States on behalf of Sudanese sanctioned entities, which are subject to U.S. embargo because of the Sudanese government’s role in facilitating terrorism and committing human rights abuses.
BNPP admitted to processing $1.74 billion on behalf of Cuban entities, even after it was clear that completing such transactions was illegal. Similarly, BNPP assisted Iranian sanctioned entities in transactions totaling more that $650 million, even after completing an internal investigation into sanctions compliance and pledging to cooperate with the government.
All U.S. government departments involved stressed the importance of this case and indicated that such action will be subject to similar consequences. Assistant Attorney General Caldwell stated that the “sentence demonstrates that financial institutions will be punished severely but appropriately for violating sanctions laws and risking our national security interests.” Chief Weber added that “the ability of IRS-CI and our partners to expose blatant violations of U.S. embargos and sanctions has changed the way financial matters are handled worldwide. We will continue to use our financial expertise to uncover these types of violations, as well as methodical and deliberate actions to conceal prohibited transactions from U.S. regulators and law enforcement.”
Additionally, BNPP pleaded guilty in New York Supreme Court to falsifying business records and conspiring to falsify business records. As a result, BNPP agreed to terminate thirteen executives, including the Chief Operating Officer, suspend U.S. dollar clearing operations through its New York Branch and other affiliates for one year for business lines on which the misconduct centered, and extend for two years a monitorship put in place in 2013.
Aaron Ambrite, Extern, Global Trade Expertise