July 3, 2014

DOJ Catch of the Week — BNP Paribas

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to BNP Paribas. On Monday, the French banking giant agreed to pay $8.9 billion and plead guilty to conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) by processing billions of dollars of transactions on behalf of Sudanese, Iranian, and Cuban entities subject to U.S. economic sanctions.   It is the first time a global bank has pleaded guilty to large-scale, systematic violations of U.S. economic sanctions. See DOJ press release.

According to a detailed statement of facts admitted to by the bank, from at least 2004 through 2012, BNP Paribas moved over $8.8 billion through the U.S. financial system on behalf of various entities within the three sanctioned countries.   The bank processed approximately $6.4 billion on behalf of Sudanese sanctioned entities from July 2006 through June 2007, including approximately $4 billion on behalf of a financial institution owned by the government of Sudan. It did this even as internal emails showed bank employees expressing concern about assisting the Sudanese government in light of its role in supporting international terrorism and committing human rights abuses during the same time period.

Similarly, from October 2004 through early 2010, BNP Paribas processed approximately $1.7 billion on behalf of Cuban sanctioned entities.   The bank admitted it continued to do so long after it was clear that such business was illegal in order to preserve the bank’s business relationships with Cuban entities.   The bank admitted that its conduct with regard to the Cuban embargo was both “cavalier” and “criminal” and involved affirmative efforts to conceal from US regulators the bank’s longstanding and illicit Cuban business. Finally, BNP Paribas engaged in more than $650 million of transactions involving entities tied to Iran and this conduct continued into 2012, almost two years after the bank had commenced an internal investigation and pledged to cooperate with the US government. The illicit Iranian transactions were done on behalf of the bank’s clients, including a petroleum company based in Dubai that was effectively a front for an Iranian petroleum company, and an Iranian oil company.

In announcing the record-setting settlement, the DOJ stressed it would not tolerate such flagrant violations of US sanctions. DOJ chief Eric Holder could not have been clearer in this regard: “If sanctions are to have teeth, violations must be punished. Banks thinking about conducting business in violation of U.S. sanctions should think twice because the Justice Department will not look the other way.” According to a New York Times report, the DOJ was greatly assisted in uncovering BNP Paribas’ violations through a series of whistleblower tips and a lawsuit brought by an individual who charged Iran with financing the Gaza bus bombing that killed his 20-year-old daughter in 1995.

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