June 30, 2014
Federal Reserve announces civil money penalty and issues cease and desist order against BNP Paribas, S.A.
For immediate release
The Federal Reserve on Monday announced a $508 million penalty against BNP Paribas, S.A., Paris, France--the largest penalty ever assessed by the agency--for violations of U.S. sanctions laws. The Federal Reserve also issued a joint cease and desist order with the Autorité de Contrôle et de Prudentiel et de Résolution (ACPR), the home country supervisor of BNP Paribas. The cease and desist order requires BNP Paribas to implement a program to ensure global compliance with U.S. sanctions laws. BNP Paribas continues to operate branches in New York, Chicago, and San Francisco, and an agency in Houston, all of which are covered by the enhanced policies and procedures required by the order.
These actions are taken in conjunction with actions by the Asset Forfeiture and Money Laundering Section of the Criminal Division of the Department of Justice, the Office of the U.S. Attorney for the Southern District of New York, the United States Department of Treasury's Office of Foreign Assets Control (OFAC), the New York County District Attorney's Office, and the New York Department of Financial Services for violations of U.S. sanctions laws and various New York State laws. The assessments issued by the agencies, including the Federal Reserve, total $8.9736 billion.
The actions were taken by the Federal Reserve for unsafe and unsound practices at BNP Paribas in connection with the firm's deficient policies and procedures for ensuring that activities conducted at its offices outside of the United States complied with U.S. sanctions laws. These deficiencies resulted in the omission or concealment of relevant information in payment messages sent through BNP Paribas's New York branch and other unaffiliated U.S. financial institutions that led to violations of the U.S. sanctions laws.
The cease and desist order issued jointly with the ACPR requires the global U.S. sanctions compliance program to include creation of a U.S. OFAC compliance office, which will be located in the United States and have authority over all of the U.S. sanctions compliance programs of BNP Paribas's global offices and business lines. The U.S. compliance office, which will be subject to oversight by U.S. regulators, will have the authority to audit any transaction and overall compliance efforts by any office or business line of the institution regarding U.S. sanctions laws, according to the joint order. BNP Paribas and its branches, affiliates, and global business lines must also comply with payment messaging standards that prohibit the omission, deletion, or alteration of information in payment messages to conceal relevant information from other financial institutions in the payment process. The Federal Reserve and the ACPR, as BNP Paribas's home country supervisor, have the authority to enforce the provisions of this order with respect to BNP Paribas's operations on a worldwide basis.
The Federal Reserve order also prohibits BNP Paribas from re-employing or otherwise engaging 11 individuals who were involved in the actions that resulted in the violations of U.S. sanctions laws. The Federal Reserve is pursuing separate enforcement actions against these individuals, which could include fines and orders prohibiting them from participating in the business of banking, including working for any institution subject to the jurisdiction of U.S. federal banking supervisors. The Federal Reserve is also pursuing enforcement actions against individuals who may have personally violated U.S. sanctions laws, and is investigating whether other individuals may have been involved in the conduct underlying the enforcement actions against the institution. BNP Paribas has agreed to cooperate in these investigations, but is not the subject of these investigations.
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