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US fines BNP Paribas record $9bn for ‘tour de fraud’

Hannah Smith
Written By:
Hannah Smith
Posted:
Updated:
05/12/2014

US authorities have hit French bank BNP Paribas with a giant $8.9bn (£5.2bn) fine for breaking trade sanctions.

The bank will plead guilty to two criminal charges of breaking US sanctions against trade with Sudan, Iran and Cuba.

The US Justice Department’s investigation showed BNP Paribas hid the names of clients from blacklisted countries when processing $30bn in transactions through the US.

Prosecutors said the bank had engaged in a “long-term, multi-jurisdictional conspiracy” when it violated international sanctions. 

“Between 2004 and 2012, BNP engaged in a complex and pervasive scheme to illegally move billions through the US financial system,” said US Attorney General Eric Holder in a press conference.

In doing so, the bank “deliberately and repeatedly violated longstanding US sanctions”, he added.

Preet Bharara, the US attorney in Manhattan accused BNP of “perpetrating what was truly a tour de fraud.”

BNP plans to slash its dividends and issue billions of euros of bonds to pay the fine, according to reports.

It will also be prevented from clearing certain transactions in US dollars for one year from the start of 2015, and has agreed to fire 13 individuals who were associated with the violations.

The enormous fine, the largest issued for such a case in US history, could almost wipe out BNP’s entire 2013 pre-tax income of $11.2bn.

BNP said as a result of the fine it would take an “exceptional charge” of €5.8bn euros (£4.6bn) in the second quarter of this year.

In April, BNP Paribas said it had set aside $1.1bn to cover the cost of US penalties, but warned the “amount of the fines could be far in excess of the amount of the provision”.

Jean-Laurent Bonnafé, CEO of BNP Paribas, said in a statement: “We deeply regret the past misconduct that led to this settlement. The failures that have come to light in the course of this investigation run contrary to the principles on which BNP Paribas has always sought to operate.”


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