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The Guardian

• Heidi Moore in New York and Jill Treanor in London
• The Guardian, Monday 30 June 2014 22.38 BST
• Jump to comments (176)

BNP Paribas, France’s biggest bank, pleaded guilty to criminal charges and agreed to pay a record-breaking penalty of nearly $8.9bn on Monday for dealing with countries that were the subject of US sanctions.

Prosecutors said the bank had engaged in a “long-term, multi-jurisdictional conspiracy” involving currency trades for clients in Sudan, Iran and Cuba that was known at the highest levels at the company.

The Department of Justice and New York state prosecutors confirmed the agreement minutes after a lawyer for the bank appeared in a Manhattan courtroom to answer one count of falsifying business records, and one count of conspiracy. The bank will appear in a federal courtroom later in the week.

At a press conference, the US attorney for the southern district of New York, Preet Bharara, aclled the bank’s actions a “tour de fraud”.

The bank’s general counsel, Georges Dirani, told the judge that BNP’s sanctions violations took place between 2004 and 2012. Prosecutors said senior executives at the bank knew of the activities. “This conduct, this conspiracy was known and condoned at the highest levels of BNP,” assistant district attorney Ted Starishevsky told the court.

The New York state banking regulator said it was banning BNP’s office in New York from conducting US dollar clearing operations for a year from 1 January 2015. The unprecedented sanction, imposed by the New York State Department of Financial Services, will largely affect BNP’s oil and gas finance business.

The regulator also said 13 individuals will leave the bank as part of the settlement, including chief operating officer Georges Chodron de Courcel. His intention to leave after 42 years was announced in June without any mention of the discussions with US regulators. Other staff face demotions and bonus cuts.

The fine is particularly bruising for BNP Paribas, which escaped the fallout from the 2008 financial crisis relatively unscathed and unlike many rival banks has not paid any fines or other penalties related to the crisis. But after months of discussion and and an intervention by French president François Hollande, the bank agreed to plead guilty to the offences.

The allegations centred on $190bn in transactions that BNP’s trade-finance arm in Switzerland processed for countries under US sanctions between 2004 and 2012.

In 2006, Bush administration officials warned foreign banks doing business in the US that they would be punished if they helped the sanctioned countries do business in dollars.

In 2007, BNP’s president told employees that the bank would stop doing business with Sudan, Iran and Cuba, according to a report in the Wall Street Journal. Yet regulators allege that BNP continued to deal with the blacklisted countries, and employees hid the transactions using satellite banks as fronts. The bank “placed its financial network at the service of rogue nations to improve its bottom line,” said assistant attorney general Leslie Caldwell on Monday.

The nearly $9bn fine is a sizable one compared to BNP’s profits – the bank made $6.5bn in 2013. Caldwell said the fine reflected the transactions that prosecutors believed they could prove were criminal. The penalties are in line with a stronger approach taken more recently by the US attorney general Eric Holder, who said that no bank was “too big to jail,” although no BNP employees in this case are going to prison.

FBI and Department of Justice officials said at Monday’s press conference that BNP’s penalty was harsher because the bank “hindered” their work. It was “an unprecedented penalty for unprecedented conduct”, Bharara said.

James Cole, deputy attorney general, said BNP shareholders had a responsibility to take a more active role: “The $9bn that’s walking out the door today is your money. Until shareholders demand from their boards [of directors] that those boards choose leaders that create a healthy culture of compliance, the money will keep walking out the door.”

The temporary ban on dollar clearing means that BNP’s clients must engage rival banks to send transactions through the financial system in the US. The sanction drew mixed reaction from analysts. RBC’s Anke Reigen warned it could send ripples through the banking industry. “In our view, a harsh decision on BNP will not come without consequences for financial markets and the banks that still have to go through the same investigation as BNP,” Reigen wrote, mentioning France’s Société Générale and Crédit Agricole, Germany’s Commerzbank and Italy’s UniCredit.

Others maintained that the ban will not have a dramatic effect. Jean-Pierre Lambert, analyst at Keefe Bruyette and Woods, said it would be “operationally feasible; likely to be invisible for [clients]; with limited financial cost for BNP.”

Lambert estimated the direct cost of the ban on BNP to be about 40m euros a year, though he did estimate that the indirect cost may include lost clients. “There is a residual risk that some clients may opt to diversify their business away from BNP.”

The fine was the latest against a number of foreign-owned banks in the US but, unusually, the deal included a guilty plea.

Swiss bank Credit Suisse was fined $2.6bn in May 2014 for helping US citizens evade tax, offences to which it also pleaded guilty.

The latest fine surpasses the $1.9bn penalty imposed on HSBC in December 2012 for sanctions-busting and money laundering offences, largely involving Mexican drug barons.

US banks have also faced a number of heavy penalties, including JP Morgan, which reached a record $13bn settlement with the US authorities in November over the sale of home loan bonds. But that sum included $9bn of compensation to settle federal and civil claims over the sale of the bonds.

The BNP Paribas investigation, thought to have begun as long ago as 2007, involved a number of US regulators including the Justice Department and Benjamin Lawsky, the head of the New York department of financial services, which took action against Standard Chartered in 2012. The fine will be split between the agencies.

At the height of the talks, Hollande wrote to Barack Obama to complain that the fine would be disproportionate, and in June, France’s foreign minister Laurent Fabius said the fine was not “reasonable”.

There have been concerns that the scale of the fine could weaken the bank by lowering its all-important capital ratios, although Michel Barnier, the European commissioner for financial services, was quoted as saying that he bank “can handle” the fine.

The bank appears to have underestimated the scale of the penalty after taking a provision of $1.1bn only a few months ago to cover the cost of the action by the US authorities, which has already knocked 15% off its share price.

BNP head Jean-Laurent Bonnafe said: “we deeply regret the past misconduct that led to this settlement,” but he also stressed the French bank’s commitment to remaining in the US where it has a branch network on the West coast.

BNP is setting up a new department in the US called Global Financial Security to ensure it complies with US rules, and will send all dollar transactions through its branch in New York.

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The Wall Street Journal

BNP Paribas SA agreed to pay nearly $9 billion Monday and plead guilty to crimes for violating U.S. sanctions, an unprecedented settlement that includes a year-long ban on the French bank’s ability to conduct certain U.S. dollar transactions.

U.S. officials, in a Washington news conference and a Manhattan courtroom, laid out in stark terms a sophisticated and long-running scheme by BNP Paribas to disguise billions of dollars in financial transactions in violation of American sanctions against Sudan, Iran and Cuba—despite…

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The United States Attornay Office

Bank Knowingly and Willfully Moved More Than $8.8 Billion Through the U.S. Financial System On Behalf Of Sanctioned Entities

BNP Paribas Will Pay Total Financial Penalties In Excess Of $8.9 Billion

Attorney General Eric H. Holder, Deputy Attorney General James M. Cole, Criminal Division Assistant Attorney General Leslie Caldwell, United States Attorney for the Southern District of New York Preet Bharara, Internal Revenue Service Criminal Investigation Chief Richard Weber, Federal Bureau of Investigation Director James B. Comey, and District Attorney Cyrus R. Vance Jr. of New York County announced that BNP Paribas S.A. (BNPP), a global financial institution headquartered in Paris, has agreed to 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 U.S. dollar transactions through the U.S. financial system on behalf of Sudanese, Iranian, and Cuban entities subject to U.S. economic sanctions. The agreement by the French bank to plead guilty is the first time a financial institution has agreed to plead guilty based on large-scale, systematic violations of U.S. economic sanctions.

Attorney General Holder said: “BNP Paribas went to elaborate lengths to conceal prohibited transactions, cover its tracks, and deceive U.S. authorities. These actions represent a serious breach of U.S. law. Sanctions are a key tool in protecting U.S. national security interests, but they only work if they are strictly enforced. 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.”

Deputy Attorney General Cole said: “BNP ignored US sanctions laws and concealed its tracks. And when contacted by law enforcement it chose not to fully cooperate. This failure to cooperate had a real effect — it significantly impacted the government’s ability to bring charges against responsible individuals, sanctioned entities and satellite banks. This failure together with BNP’s prolonged misconduct mandated the criminal plea and the nearly $9 billion penalty that we are announcing today.”

Assistant Attorney General Caldwell said: “By providing dollar clearing services to individuals and entities associated with Sudan, Iran, and Cuba – in clear violation of U.S. law – BNPP helped them gain illegal access to the U.S. financial system. In doing so, BNPP deliberately disregarded U.S. law of which it was well aware, and placed its financial network at the services of rogue nations, all to improve its bottom line. Remarkably, BNPP continued to engage in this criminal conduct even after being told by its own lawyers that what it was doing was illegal.”

U.S. Attorney Preet Bharara said: “BNPP banked on never being held to account for its criminal support of countries and entities engaged in acts of terrorism and other atrocities. But that is exactly what we do today. BNPP, the world’s fourth largest bank, has agreed to plead guilty and pay penalties of almost $9 billion for performing the hat trick of sanctions violations, unlawfully opening the doors of the U.S. financial markets to three sanctioned countries, Sudan, Iran, and Cuba. For years, BNPP provided access to billions of dollars to these sanctioned countries, as well as to individuals and groups specifically identified and designated by the U.S. government as being subject to sanctions. The bank did so deliberately and secretly, in ways designed to evade detection by the U.S. authorities. For its years-long and wide-ranging criminal conduct, BNPP will soon plead guilty in a federal courthouse in Manhattan.”

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.

FBI Director James Comey said: “The significant financial penalties imposed on BNP Paribas sends a powerful deterrent message to any company that places its profits ahead of its adherence to the law. We will continue to work closely with our federal and state partners to ensure compliance with U.S. banking laws to promote integrity across financial institutions and to safeguard our national security.”

IRS-CI Chief Weber said: “Today’s outcome is a testament to U.S. efforts to stem the exploitation of the American financial system and ensure that if you chose to do business in our country you must abide by our laws. BNP Paribas will forfeit the historic figure of almost $8.9 Billion representing the proceeds of criminal activity. BNPP had many opportunities to take corrective action and abide by the law, and yet, despite warnings from American regulators and other banks, consciously chose to ignore those warnings and commit literally thousands of flagrant violations. IRS-CI, and our domestic and international law enforcement partners, will continue to pursue these cases and follow the money trail – wherever it may lead.”

District Attorney Vance said: “The most important values in the international community – respect for human rights, peaceful coexistence, and a world free of terror – significantly depend upon the effectiveness of international sanctions. Today’s guilty plea marks the seventh major case involving sanctions violations by a large international bank that my Office has pursued and resolved since 2009. These cases are critically important for international public safety and the security of our banking system, which is put at risk when it is used to further criminal activity. The seven investigations have revealed a series of widespread schemes to falsify the business records of financial institutions in Manhattan and have resulted in the forfeiture of approximately $12 billion in total. But, more importantly, they have resulted in a fundamental change in the way all banks conduct their business, have heightened vigilance worldwide with respect to dealing with sanctioned entities, and have increased the integrity of our Manhattan-based financial institutions.”

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.

In addition to the joint forfeiture judgment, the New York County District Attorney’s Office is also announcing today that BNPP has pleaded guilty in New York State Supreme Court to falsifying business records and conspiring to falsify business records. In addition, the Board of Governors of the Federal Reserve System is announcing that BNPP has agreed to a cease and desist order, to take certain remedial steps to ensure its compliance with U.S. law in its ongoing operations, and to pay a civil monetary penalty of $508 million. The New York State Department of Financial Services (DFS) is announcing BNPP has agreed to, among other things, terminate or separate from the bank 13 employees, including the Group Chief Operating Officer and other senior executives; 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; extend for two years the term of a monitorship put in place in 2013, and pay a monetary penalty to DFS of $2.2434 billion. In satisfying its criminal forfeiture penalty, BNPP will receive credit for payments it is making in connection with its resolution of these related state and regulatory matters. The Treasury Department’s Office of Foreign Assets Control has also levied a fine of $963 million, which will be satisfied by payments made to the Department of Justice.

According to documents released publicly today, including a detailed statement of facts admitted to by BNPP, BNPP has acknowledged that, from at least 2004 through 2012, it knowingly and willfully moved over $8.8 billion through the U.S. financial system on behalf of Sudanese, Iranian and Cuban sanctioned entities, in violation of U.S. economic sanctions.

The majority of illegal payments were made on behalf of sanctioned entities in Sudan, which was subject to U.S. embargo based on the Sudanese government’s role in facilitating terrorism and committing human rights abuses. BNPP processed approximately $6.4 billion through the United States 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, even as internal emails showed BNPP employees expressing concern about the bank’s assisting the Sudanese government in light of its role in supporting international terrorism and committing human rights abuses during the same time period. Indeed, in March 2007, a senior compliance officer at BNPP wrote to other high-level BNPP compliance and legal employees reminding them that certain Sudanese banks with which BNPP dealt “play a pivotal part in the support of the Sudanese government which . . . has hosted Osama Bin Laden and refuses the United Nations intervention in Darfur.”

One way in which BNPP processed illegal transactions on behalf of Sudanese sanctioned entities was through a sophisticated system of “satellite banks” set up to disguise both BNPP’s and the sanctioned entities’ roles in the payments to and from financial institutions in the United States. As early as August 2005, a senior compliance officer at BNPP warned several legal, business and compliance personnel at BNPP’s subsidiary in Geneva that the satellite bank system was being used to evade U.S. sanctions: “As I understand it, we have a number of Arab Banks (nine identified) on our books that only carry out clearing transactions for Sudanese banks in dollars. . . . This practice effectively means that we are circumventing the US embargo on transactions in USD by Sudan.”

Similarly, BNPP provided Cuban sanctioned entities with access to the U.S. financial system by hiding the Cuban sanctioned entities’ involvement in payment messages. From October 2004 through early 2010, BNPP knowingly and willfully processed approximately $1.747 billion on behalf of Cuban sanctioned entities. In the statement of facts, BNPP admitted that it continued to do U.S. dollar business with Cuba long after it was clear that such business was illegal in order to preserve BNPP’s business relationships with Cuban entities. BNPP further admitted that its conduct with regard to the Cuban embargo was both “cavalier” and “criminal,” as evidenced by the bank’s 2006 decision, after certain Cuban payments were blocked when they reached the United States, to strip the wire messages for those payments of references to Cuban entities and resubmit them as a lump sum in order to conceal from U.S. regulators the bank’s longstanding, and illicit, Cuban business.

Further according to court documents, BNPP engaged in more than $650 million of transactions involving entities tied to Iran, and this conduct continued into 2012 – nearly two years after the bank had commenced an internal investigation into its sanctions compliance and had pledged to cooperate with the Government. The illicit Iranian transactions were done on behalf of BNPP clients, including a petroleum company based in Dubai that was effectively a front for an Iranian petroleum company, and an Iranian oil company.

This case was investigated by the IRS-Criminal Investigation’s Washington Field Division and the FBI’s New York Field Office. This case is being prosecuted by the Money Laundering and Bank Integrity Unit of the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS), and the Money Laundering and Asset Forfeiture Unit of the U.S. Attorney’s Office for the Southern District of New York. Trial Attorneys Craig Timm and Jennifer E. Ambuehl of AFMLS and Assistant United States Attorneys Andrew D. Goldstein, Martin S. Bell, Christine I. Magdo, and Micah W.J. Smith of the Southern District of New York are in charge of the prosecution.

The New York County District Attorney’s Office also conducted its own investigation alongside with the Department of Justice on this investigation. The Department of Justice expressed its gratitude to the Board of Governors of the Federal Reserve, the Federal Reserve Bank of New York, the New York State Department of Financial Services and the Treasury Department’s Office of Foreign Assets Control for their assistance with this matter.

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BNP Paribas Information

BNP Paribas Statement of Facts

BNP Paribas Notice of Intent

BNP Paribas Plea Agreement

BNP Paribas Consent Preliminary Order of Forfeiture

[youtube]http://www.youtube.com/watch?v=I49RzVTWC00[/youtube]

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O governador do Banco de Portugal, Carlos Costa, invocou o sigilo bancário para se escusar a prestar informações aos deputados da comissão parlamentar de Orçamento, Finanças e Administração Pública, sobre as mudanças em curso no Banco Espírito Santo (BES).

O presidente desta comissão parlamentar, o socialista Eduardo Cabrita, esclareceu à Lusa que houve uma reunião de coordenadores em que foi decidido que seria pedida a vinda do governador do Banco de Portugal à comissão para ser ouvido a propósito do BES.

Costa invoca sigilo bancário

Comunicado do Banco de Portugal sobre informação do Banco Espírito Santo, S.A. a propósito de proposta do acionista Espírito Santo Financial Group, S.A.

O Banco de Portugal tomou conhecimento da informação divulgada hoje pelo Banco Espírito Santo, S.A., referente ao pedido de convocatória de Assembleia Geral recebido da Espírito Santo Financial Group, destinado a alterar os estatutos de modo a criar um novo órgão estatutário, denominado Conselho Estratégico, para o qual transitam os senhores Dr. Ricardo Espírito Santo Silva Salgado, Dr. José Manuel Pinheiro Espírito Santo Silva, Dr. José Maria Espírito Santo Silva Ricciardi, Dr. Ricardo Abecassis Espírito Santo Silva e Dr. Pedro Mosqueira do Amaral, e consequente designação de novos elementos para o órgão de administração do Banco Espírito Santo, S.A..

Relativamente ao preenchimento dos órgãos de administração e de fiscalização, o Banco de Portugal aguarda a decisão da Assembleia Geral dos acionistas do Banco Espírito Santo, S.A., para avaliar o cumprimento por cada um dos indigitados dos requisitos necessários para o exercício de tais funções, definidos na legislação em vigor, designadamente os previstos nos artigos 30.º e 31.º do Regime Geral das Instituições de Crédito e Sociedades Financeiras.

O Banco de Portugal também aguarda que lhe seja submetido, para avaliação, o modelo de governo interno que venha a ser aprovado em Assembleia Geral.

Lisboa, 20 de junho de 2014