The largest bank in France, BNP Paribas, disguised $1.75 billion in illegal transactions with Cuban entities as part of a long string of violations of U.S. sanctions that brought it a record $8.9 billion in forfeitures and fines, according to U.S. prosecutors.
A prosecution document on the case said BNP already has corrected its ways, “including terminating all business and prohibiting new business in any currency with sanctioned entities” in Cuba, Iran and Sudan.
It was not clear how the case would impact Cuba, already restricted by the U.S. embargo and U.S. laws and regulations on money laundering and terrorism financing. BNP shuttered its Havana office last year, after it came under U.S. investigation.
“This is a very important bank, but it doesn’t mean other banks won’t be able to do transactions,” said Luis F. Luis, a former chief economist at the Organization of American States who follows Cuban banking.
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The U.S. Justice Department on Monday announced an agreement with BNP, under negotiation for several months, for the bank to forfeit $8.83 billion and pay a $140 million fine for violating U.S. sanctions on the three countries from 2000 to 2010.
The bank pleaded guilty to criminal charges in New York State and is expected to plead guilty to federal charges within a few weeks.
BNP officials knew and approved of repeated violations by leaving out the names of the sanctioned countries from transactions sent to the bank’s New York office, according to the 36-page “Statement of Fact” filed by U.S. prosecutors in New York.
“During the course of its illicit conduct, BNP processed thousands of U.S. dollar-denominated financial transactions with Sanctioned Entities located in Cuba, with a total value in excess of $1.747 billion,” the document said. The use of U.S. dollars anywhere is subject to U.S. laws and regulations.
That amount included more than $300 million in transactions with an enterprise identified only as “one of Cuba’s largest state-owned commercial companies” and one that is on the U.S. watch list of “Specially Designated Nationals,” the document added.
Bank employees “directed that transactions involving Cuba omit references to Cuba in payment messages” to hide them from U.S. watchdogs, it said. And after three transfers in 2006 were blocked because they mentioned Cuba, BNP resubmitted them without mention of Cuba and through different U.S banks.
“From at least 2000 up through and including 2010, BNP, through its Paris headquarters, conspired with numerous Cuban banks and entities as well as financial institutions outside of Cuba to provide U.S. dollar financing to Cuban entities in violation of the U.S. embargo,” the document added.
The use of such large quantities of U.S. dollars in the BNP deals is surprising because Cuban banks generally use euros to avoid U.S. blocks, said a former Havana banker who defected in 2005 and asked to remain anonymous because he still has family in Cuba.
Although the Statement of Fact did not identify the enterprises involved in the violations, it included several examples of illegal “Cuban Credit Facilities” that showed they covered a broad range of Cuban government financial and commercial activities.
One of the facilities involved U.S. dollar loans to a company in Netherlands to finance the company’s purchase of crude oil products that were to be refined in and sold to Cuba, according to the document.
Another facility involved U.S. dollar loans for “one of Cuba’s largest state-owned commercial companies” identified in the document only as Cuban Corporation 1.
The facilities “were structured in highly complicated ways,” it added. And BNP employees confirmed to U.S. investigators that the complexities “had no business purpose other than to conceal the connection to Cuba.”
The $8.9 billion in forfeitures and fines amounts to the largest sanctions violations case ever brought by the Justice Department, and was reported to be the largest in any criminal case against a U.S. bank.
Several European and other banks have paid stiff fines in recent years for violating U.S. regulations on business with Cuba, Iran, Sudan, Syria and other countries sanctioned for weapons development, human rights abuses and other issues.
In 2011, ING bank in the Netherlands agreed to pay $619 million to settle allegations of illegal dealings with sanctioned countries. Two years earlier, Credit Suisse Bank had paid $536 million and in 2004 the Swiss UBS bank had paid $100 million for similar cases.
But BNP’s violations were portrayed as more brazen and broader in the Statement of Fact, agreed to by both U.S. prosecutors and bank officials.
Shortly after one Cuba-related transfer was blocked in 2006, a senior bank attorney in Paris consulted with a U.S. law firm on whether the block “could … trigger a retroactive investigation” by U.S. authorities, the document said.
The U.S. law firm replied in a memorandum that “the risk of serious regulatory sanction … is such that BNP Paribas should consider discontinuing participation in any such U.S. dollar facility,” according to document said.
But after a junior BNP attorney forwarded the memorandum to a bank officer in charge of complying with laws and regulations, he was reprimanded by the senior attorney “who insisted that ‘it was a draft memo and should not have been distributed to just anyone.’”
“We now no longer have control over its status. Do not do anything more on this file without talking to me about it,” the senior lawyer told the junior, according to the document.
The junior attorney, it added, responded that the compliance officer would “delete the e-mail.”