The US Justice Department is reportedly pushing for a $10bn fine to be levied against BNP Paribas to settle charges that the French bank flouted economic sanctions against Iran, Sudan and other countries.
The potential fine, first reported by the Wall Street Journal, is likely to be accompanied by an admission of wrongdoing and comes amid a crackdown on banks by the Justice Department.
At $10bn, the settlement would be more than five times the $1.9bn agreement the Justice Department reached with HSBC over its sanctions violations in 2012.
In Paris, the bank’s share price dropped sharply on news of the possible scale of the penalty. BNP warned in April that it could end up paying much more than the $1.1bn it had set aside to settle charges, but the new figure is far higher than most previous estimates.
BNP is being investigated by federal authorities and New York’s financial authorities over transactions from Cuba, Iran and Sudan that may have violated US money-laundering rules as well as the economic sanctions that ban US bank offices from doing business with those countries.
HSBC’s 2012 fine was for similar charges. The then-record payment related to transactions HSBC made that benefited Mexican drug cartels as well as countries the US considered “rogue states” – including Iran, Libya and Sudan. But the British bank was also able to escape without admitting criminal wrongdoing.
On top of the potentially huge fine, BNP Paribas could suffer a temporary ban on processing dollar transactions, a business that is essential to the operations of an international bank. Benjamin Lawsky, New York's aggressive superintendent of financial services, is said to be seeking a suspension.
The record-breaking fine that could be imposed upon France's largest bank has alarmed French authorities. Christian Noyer, the governor of the Bank of France,said earlier this month that BNP's did not violate European or French laws.
"We have indeed verified that all the transactions were in line with EU and French rules, regulations and directives," Noyer said at a news conference. "So there have been no breaches."
If the fine is imposed, it would come shortly after the Justice Department fined Credit Suisse for running what senators called a “cloak-and-dagger” scheme to help 22,000 US customers hide billions from the tax authorities.
That fine showed “no financial institution no matter its size or global reach is above the law,” attorney general Eric Holder said at the time.
The Justice Department has toughened its stance on fining banks after stinging criticism from Congress and elsewhere of fines related to the financial crisis that have left the banks largely unscathed and have avoided any charges of criminal wrongdoing.
The US authorities declined to comment, as did a spokesman for BNP Paribas in London.
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