BNP Paribas SA (EPA:BNP) (OTCMKTS:BNPQY) is accused of violating U.S. economic sanctions against Iran and several other countries. The French bank is facing criminal charges and a penalty of around $2 billion, according to Wall Street Journal based on information obtained from sources knowledgeable about the situation.
BNP Paribas’ internal investigation
The source said authorities in the United States are also considering criminal charges against individual employees.
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BNP Paribas SA (EPA:BNP) (OTCMKTS:BNPQY) conducted an internal investigation and found transactions that violated the sanctions against Iran. One person said the French bank tried to conceal those transactions by altering trades to remove the codes that identify its origin. The process is called stripping.
One of the people said there is a continuing negotiation between the French bank and U.S. authorities. A guilty plea is not certain and there is a possibility for the negotiation to fall apart. The Wall Street Journal noted that BNP Paribas SA (EPA:BNP) (OTCMKTS:BNPQY) might end up with a guilty plea if the U.S. government decides to file criminal charges against it. That would be the first guilty plea by a bank in decades.
According to the report, prosecutors met with BNP Paribas SA (EPA:BNP) (OTCMKTS:BNPQY) banking regulators including New York Financial regulator, Benjamin Lawsky, the Federal Bank of New York, and the Office of Foreign Assets Control of the Treasury Department to make sure that a case against it will not trigger automatic debarment such as revocation of the bank’s charter.
One person familiar with the issue speculated that BNP Paribas SA (EPA:BNP) (OTCMKTS:BNPQY) could settle the charges within weeks. Authorities will still determine the actual amount of penalty that will be imposed to the French bank. It would become the 10th financial institution to settle allegations of violating U.S. sanctions against Iran and other countries.
Last Wednesday, BNP Paribas SA (EPA:BNP) (OTCMKTS:BNPQY) said the penalty could exceed the $1.1 billion it previously allocated to settle the U.S. investigation regarding the matter. According to the bank, “there is the possibility that the amount of the fines could be far in excess of the amount of the provision. BNP Paribas added that its negotiation with authorities “demonstrate that a high degree of uncertainty exists as to the nature and amount of penalties that the U.S. authorities could impose on the bank.”
Separately, BNP Paribas SA (EPA:BNP) (OTCMKTS:BNPQY) reported its financial performance for the first quarter. The bank said its revenues declined 0.0% to €9.91 billion and it net income attributable to equity holders were €1.7 billion, up by 5.2%. Its liquidity reserve was €264 billion as of March 31, 2014. Its fully loaded Basel 3 CET1 ratio was 10.6%.