WASHINGTON -- BNP Paribas SA is close to an agreement to plead guilty and pay $8 billion to $9 billion to settle allegations that it violated U.S. sanctions, according to a person familiar with the negotiations.
The French bank intentionally hid transactions amounting to about $30 billion that violated U.S. sanctions against countries including Iran and Sudan, said the person, who asked not to be identified because the discussions are confidential. Paris-based BNP Paribas will probably plead guilty in early July to a criminal charge of conspiring to violate the International Emergency Economic Powers Act, the person said.
Terms of a settlement aren't final, although the two sides have reached a broad agreement in principle, said the person. Leslie Caldwell, head of the Justice Department's criminal division, and bank officials spoke Friday about the potential resolution, the person said.
Cesaltine Gregorio, a BNP Paribas spokesman in New York, declined to comment. Brian Fallon, a Justice Department spokesman, didn't immediately return an email seeking comment after normal business hours.
The Wall Street Journal reported the broad settlement terms earlier. The bank hasn't reached an agreement with the New York Department of Financial Services on a suspension of dollar-clearing, according to another person familiar with the negotiations.
"This looks good given some higher numbers had been reported in terms of fines," Christian Hamann, an analyst with Hamburger Sparkasse said Monday from Hamburg. "The problem is the guilty plea. The consequences are unknown."
Closing a business for a few months would present BNP Paribas with administrative costs and test the willingness of clients to remain with the bank after the period in which it is unable to provide one of the services they require, said Hamann.
The settlement would make BNP Paribas the second major European bank to plead guilty in the U.S. this year. In May, Credit Suisse Group AG agreed to pay $2.6 billion, the largest penalty in an offshore tax case, after using secret Swiss accounts to help Americans hide money from the Internal Revenue Service. Its main banking unit pleaded guilty to a criminal charge.
U.S. investigators have evidence that BNP Paribas moved funds related to companies and government agencies in Sudan through regional banks during a period when the country was the subject of sanctions over allegations of genocide, The Wall Street Journal reported, citing people familiar with the matter.
Investigators in the U.S. had sought at least $10 billion to resolve the probe of BNP Paribas, people familiar with the discussions have said.
New York's top banking regulator, Benjamin Lawsky, had pressed for the dismissal of BNP Paribas Chief Operating Officer Georges Chodron de Courcel along with about 12 other employees at the bank, a person familiar with the matter has said. None of the BNP executives has been accused of wrongdoing.
Chodron de Courcel will step down at the end of the month after more than 40 years at the bank, BNP Paribas said June 12. Dominique Remy, who previously ran BNP's commodities finance business, has left the bank, according to the company.
U.S. authorities first learned about possible wrongdoing by BNP Paribas around 2007, when an informant contacted the Manhattan district attorney's office. The bank conducted its own investigation and about a year later came forward with its findings, people familiar with the matter have said.
HSBC Holdings Plc agreed to pay $1.9 billion in 2012 to resolve a sanctions-violation and money-laundering investigation, while it avoided a guilty plea by admitting wrongdoing as part of its accord. That had been the largest settlement for doing business with sanctioned countries.
U.S. prosecutors argued that a more severe penalty against BNP Paribas was justified because the misconduct was more egregious and the bank didn't fully cooperate with the investigation, a person with knowledge of the matter has said.
Information for this article was contributed by David Scheer, Greg Farrell and Nicholas Comfort of Bloomberg News.
Business on 06/24/2014