NEW YORK STATE DEPARTMENT

OF FINANCIAL SERVICES
~ ~ X
In the Matter of
CONSENT ORDER UNDER
NEW YORK BANKING LAW 44
BNP P ARIBAS, S.A.
New York Branch
__________________________________X
The New York State Department of Financial Services ("the Department" or "DFS") and
BNP Paribas S.A., Paris, France ("BNP Paribas" or "BNPP" or the "Bank") stipulate that:
WHEREAS, BNP Paribas is a foreign bank with complex operations and multiple
business lines and legal entities in many countries worldwide;
WHEREAS, BNP Paribas conducts operations in the United States through various
subsidiaries and entities including its branch in New York, New York (the "New York Branch");
WHEREAS, the Department is the licensing agency ofthe New York Branch, pursuant
to Article II of the New York Banking Law ("NYBL") and is responsible for its supervision and
regulation.
WHEREAS, BNP Paribas is pleading guilty to a one-count information filed in the U.S.
District Court for the Southern District ofNew York on June 30,2014, which accuses the Bank
of conspiracy to commit an offense against the United States in violation of Title 18, United
States Code, Section 3 71, by conspiring to violate the International Emergency Economic
Powers Act ("IEEPA"), codified at Title 50, United States Code, Section 1701 et seq., and
regulations issued thereunder, and the Trading with the Enemy Act ("TWEA"), codified at Title
50. United States Code Appendix. Section 1 et seq., and regulations issued thereunder.
WHEREAS, BNPParibas is pleadingguiltyto onecountofFalsifyingBusinessRecords
in the FirstDegree,pursuanttoNewYorkPenalLawSection 175.10,and onecountof
Conspiracyin theFifthDegree,pursuanttoNewYorkPenalLawSection 105.05(1).
WHEREAS, in connectionwiththefederal and statecharges listedabove, BNPParibas
admittedcertainfacts andconduct, including:
thatBNPPdevelopedand implementedpoliciesand proceduresforprocessing
U.S. dollar-denominatedtransfersthroughtheNewYorkBranchand unaffiliated
U.S. financial institutions in amannerthatwasdesignedto concealrelevant
informationregardingSudan, Iran and Cubathatwouldpermitthe institutionsand
theirregulatorsto determinewhetherthetransactionswerelawfuland consistent
withNewYorkStateand U.S. laws and regulations; and
thatBNPP'sconductallowedsanctionedcountriesand entities, including
SpeciallyDesignatedNationals,
1
to accesstheU.S. financial systemandengage
in billions ofdollarsworthofU.S. dollar-basedfinancial transactions,
significantlyunderminingthe U.S. sanctionsand embargos.
WHEREAS, BNPParibas' conductviolatedU.S. national securityand foreign policy
and raised serious safetyandsoundnessconcernsforregulators, includingtheobstructionof
governmentaladministration,failureto reportcrimesandmisconduct, offeringfalse instruments
forfiling, and falsifying businessrecords.
NOW, THEREFORE, thepartiesagreeto thefollowing:
1
A SpeciallyDesignatedNational ("SDN")appearson alistofindividuals, groups, and entitiessubjectto economic
sanctions by the United States TreasuryandtheOfficeofForeign Assets Control ("OFAC"). SONs are individuals
and companies,specificallydesignated as havingtheirassets blocked from the U.S. financial system by virtueof
beingownedorcontrolled by, oractingfor on behalfof, targeted countries, as well as individuals, groups, and
entities,suchas terrorists and narcoticstraffickers,designated undersanctions programsthatare notcountry-
specific.
2
1. Fromat least2002through 2012,BNPParibasprovided U.S. dollar
clearingservicesonbehalfofSudanese,Iranian,and Cubanparties("SanctionedParties")witha
valueofmorethan$190 billionwhichweresettledthroughtheNewYorkBranchandotherNew
York-basedfinancial institutions.
2
2. ThetransactionswiththeSanctionedPartieswere identifiedduringthe
Bank'sinternalreviewofits U.S. dollartransactionsfortheperiodof2002-2009(the"Review
Period").
3. Inprocessingtransactionson behalfofthese SanctionedParties,BNP
Paribasengaged in asystematicpractice,as directedfrom highlevelsoftheBank'sgroup
management,ofremovingoromittingSudanese, Iranian, orCubaninformationfrom U.S. dollar-
denominatedpaymentmessagesthatitsentthroughtheNewYorkBranchandothernon-
affiliatedNewYork-basedU.S. financial institutionsto "guaranteetheconfidentiallyofthe
messagesandtoavoidtheirdisclosureto anypotential investigatoryauthorities."
4. TheBank'swritten instructions includedwarningstopersonneland
SanctionedPartiessuchastheonecontainedin aMemorandum to the Operations Center that
advisedwith respectto aCubantransaction,"AttentionCuba:pleasedo not mentionCubaonthe
[MT-] 202[SWIFTMessages]."
3
5. Fromas earlyas 1995 throughatleast2007memorandawerecirculatedto
theBank'soperationsstaff withtheblanketdirectivefor U.S. dollardenominatedtransactions
2
U.S. dollarclearing is theprocess by whichU.S. dollar-denominated paymentsbetweencounterparties are made
through abank in the United States.
3
TheSocietyofWorldwideInterbankFinancialTelecommunications("SWIFT")is avehiclethroughwhich banks
exchangewiretransfermessages withotherfinancial institutions, includingU.S. correspondent banks. SWIFT
messagescontainvarious informational fields.
3
involvingIran: "Donotstipulate in anycasethe nameofIranianentitiesonmessagestransmitted
to Americanbanksorto foreign banksinstalled in the U.S.A."
6. In additionto theBank'sgroup-widepolicyinstructions, individual
paymentinstructionsfor SanctionedPartiescontained admonitionsto the Bank'sstaffto refrain
from usingidentifyinginformation. Forexample,onepaymentmessagefor aSudaneseparty
wasstamped"URGENT,""ATTENTIONEMBARGO"andcautioned,"! Transferin$without
mentioning[SudaneseBank] totheUSA!!!"
New York
7. CompliancestaffattheNewYorkBranchoperated knowingthattheydid
nothaveadequate legal and complianceauthorityto ensurethatactivitiesconductedfrom BNP
Paribasoffices outsideoftheUnitedStatescompliedwithNewYorkand U.S. laws and
regulations. Thispracticewas intentional. In aJanuary2006email addressingthequestionof
whetherornottheBank'sEnergy, Commodities,Export& Project("ECEP")groupran therisk
ofan allegationofcircumventingtheU.S. embargo,aBNPPemployeedescribedan "omission"
procedureas follows: "Apracticeexistswhichconsists inomittingthe Beneficiaries/Ordering
patiy'scontactinformationfor USDtransactionsregardingclientsfrom countriesthatare under
U.S. embargo: Sudan, Cuba, Iran. ThisavoidsputtingBNPPNYin a positionto uncoverthese
transactions,to blockthem, and to submitrep01istothe regulator."
8. EventhehighestlevelsofthecompliancedivisionfortheNewYork
Branchrecognizedandacceptedthatamending, omittingandstrippingwaswidespreadamong
foreign bankstransmittingfundsthroughtheU.S. WhenasettlementwithU.S regulatorsand
DutchbankABNAMROwasannouncedforviolationsofU.S. sanctions law, theHeadofEthics
4
and ComplianceNorthAmericawrotein an emailto anotheremployee,"thedirtylittlesecret
isn'tso secretanymore,oui?"
9. In responsetoanemailfrom thecomplianceofficeoftheNewYork
Branch,which raised concernsaboutemployingcoverpaymentsto makeatransaction
nontransparent, BNPPcomplianceofficers in Paris discussed howbestto deal withthe matter.
Accordingto documentsobtained bythe U.S. DepartmentofJustice,theParisiancompliance
officersweighedthe costsand benefitsofdeceivingtheNewYorkBranchas opposedto an
unaffiliatedU.S. bank:
If[theNewYorkheadofethicsandcompliance] onlyoffersthe
choicebetweenabandoningthe [coverpayments] formovementin
favorofclienteleorpromisingBNPPNYwe do notwiretransfer
in USDconcerningCuba, Iran, SudanorSyria, Ionlyseethe
solutionofgoingthroughanotherbankthanBNPPNYfor all
transactionstothesedestinations. Theother, less gratifying
alternativesareto stopworking in USD in thesezonesorto
disguisetherealitywiththeno winsituationbetweentellingstories
to BNPPNYorto [theunaffiliatedU.S. bank].
Sudan
10. DuringtheReviewPeriod, BNPParibas,throughtheGenevabranchofits
Swisssubsidiary,BNPParibas(Suisse)S.A. ("BNPP Geneva"), createddeceptiveschemesand
transaction structuresto concealthousandsofillegal Sudanesetransactionsfrom scrutinybyU.S.
financial institutions,regulatorsand authorities. Thesetransactionswere valuedat morethan
$20billiondollars.
11. BNPPGenevadeveloped deceptivepolicies,proceduresandtransaction
structures inordertoprocess U.S. dollar-denominatedfunds transfersthroughtheNewYork
Branchand otherU.S. financial institutionsforsanctionedSudaneseparties.
5
12. In BNPPGeneva'sbackoffice, therewaspolicyto strip, amendand omit
elementsofU.S. dollarpaymentmessagesthatcouldserveto identifySanctionedParties,
includingmostprominently,thoserelatedto Sudan. An internal policyforprocessingU.S.
dollarpayments involvingSudanstated: "Donotlistin anycasethe nameofSudaneseentities
onmessagestransmittedto Americanbanksorto foreignbanks installed in theU.S."
13. This policyintentionallypreventedU.S. institutionsfrom performing
required screeningforthepresenceofSanctionedPartiesonU.S. dollar-denominated
transactionsand hid from U.S. regulatorsand authoritiestheparticipationofSudaneseentities in
U.S. dollar-denominatedtransactions.
14. Amongthese SanctionedPartieswere 18 SudaneseSDNs,ofwhichsix
wereclientsofBNPP. Duringtheperiodused bytheJusticeDepartmenttocalculatethevolume
ofFederal Violations, BNPPexecutedapproximately$4 billiondollarsin transactionsforthese
SDNs. Forthemostpart,thesetransactionswereprocessedforafinancial institutionowned by
theGovernmentofSudan. DuringtheentireReviewPeriod,therewereover$6 billiondollarsin
transactionsprocessedfor SDNs.
15. BNPPGenevamanaged orfinanced billionsofdollarsworth ofU.S.
dollar-denominated lettersofcreditfor Sudaneseparties. In orderto transmitthepayment
messagesassociatedwiththe lettersofcreditthroughNewYorkfinancial institutions,BNPP
Genevastrippedand omittedreferencesto Sudanin the messagesto preventthetransactionfrom
beingblocked in theU.S. Thesetransactionsweredesigned to avoid the detectionofsanctions
violationsby U.S. regulators.
16. Soonafterthe impositionofU.S. sanctionsagainstSudanin 1997,BNPP
Genevaestablishedaccountrelationships withunaffiliatedregionalbanks ("RegionalBanks")
6
located in Africa, Europe and the Middle East, eventually nine in all, some with no other
business purpose than to clear payments for Sudanese clients.
4
The accounts with the Regional
Banks were created and established to provide a means to circumvent U.S. sanctions.
17. Specifically, BNPP Geneva utilized the Regional Banks in a two-step
process designed to enable BNPP Geneva's Sudanese clients to evade U.S. sanctions. In the first
step, a Sudanese bank seeking to move U.S. dollars out of Sudan transferred funds internally
within BNPP Geneva to a BNPP Geneva account specifically maintained by a Regional Bank to
facilitate U.S. dollar transfers from Sudan. In the second step, the Regional Bank transferred the
money to the Sudanese bank's intended beneficiary through a U.S. bank without reference to the
Sudanese bank. As a result, it appeared to the U.S. bank that the transaction was coming from
the Regional Bank rather than a Sudanese bank.
18. A similar process enabled sanctioned Sudanese banks to receive U.S.
dollars without being detected: the originator of the transaction sent a wire transfer through the
United States to the Regional Bank's account at BNPP Geneva without reference to Sudan, and
the Regional Bank then transferred the money to the Sudanese bank via internal transfer at BNPP
Geneva. Moreover, in order to further disguise the true nature of the Regional Bank transactions,
employees at BNPP Geneva frequently worked with the Regional Banks to wait between one and
two days after the internal transfer before making a dollar-for-dollar, transaction-by-transaction,
clearing of funds through the United States, del inking the U.S. transfer of funds from the prior
transfer involving the Regional Banks so that financial institutions in the United States and U.S.
authorities would be unable to link the payments to the involved Sanctioned Party.
4
In the account opening documentation for these banks the following notation appeared: "As requested, we hereby
confirm that we wish to open the account to facilitate transfers of funds for our mutual Sudanese customers."
7
19. In fact, BNPPemployees internallyproposedto BNPPGeneva
compliancestaffthattheyshouldgettheRegional Banks"accustom[ed]...to spacingoutthegap
betweencoverstheyexecutewiththeirU.S. correspondentsto the extentpossible." Ultimately,
BNPPGenevasuccessfullyusedthe RegionalBankstructure,whichhad no businesspurpose
otherthanto help BNPP'sSudaneseclientsevadetheU.S. embargo,toprocessthousandsof
U.S. dollartransactions, worthbillionsofdollars intotal.
20. Theuse ofRegional Banksto facilitate U.S. dollartransactionswith
SudaneseSanctionedPartieswaswidelyknownwithinBNPPGeneva. Forexample, in a2004
emailto aBNPPGenevafrontofficeemployee, a Regional Bankrequested"toopenanaccount
atBNPParibasGenev[a] to be usedmainlyforthe USDTransfersto andfrom SudaneseBanks."
Thisemailwasforwarded to anotherBNPPGenevafrontofficeemployeewho recommended
openingtheaccount, as "theopeningofthis accountfits intheframeworkofouractivityin
Sudan." Referencingthisexchange, anotherBNPPGenevaemployeecommentedthat: "we
haveadvised [Regional Bank] foralongtimeto opena VOSTROaccountto facilitatethe
transactionswhichthis institutionhas withcountrieswithwhichwearealsoactive."
21. BNPPcomplianceofficerswarnedthe BNPPbusinessemployeesoftheir
concernsregardingthe Sudanesebusiness. Inan August2005 email, aseniorcomplianceofficer
warned, "[We]haveanumberofArabBanks(nineidentified)onourbooksthatonlycarryout
clearingtransactionsfor Sudanesebanksin dollars... Thispracticeeffectivelymeansthatweare
circumventingthe U.S. embargoontransactions in USD by Sudan." TheBNPPbusiness
managersweremoreconcernedwithBNPP's"goodwill in theSudan,"andthereforethe
businesscontinueddespitethewarnings from complianceofficers.
8
22. In September 2005, senior compliance officers at BNPP Geneva arranged
a meeting of BNPP executives "to express, to the highest level of the bank, the reservations of
the Swiss Compliance office concerning the transactions executed with and for Sudanese
customers." The meeting was attended by several senior BNPP Paris and Geneva executives,
including BNPP' s Chief Operating Officer ("COO") at the time. At the meeting, the COO
dismissed the concerns of the compliance officials and requested that no minutes of the meeting
be taken.
23. BNPP's compliance personnel continued to warn against BNPP's use of
Regional Banks to process transactions with Sanctioned Parties. For example, a 2005
compliance report described the scheme as follows:
The main activity of certain BNPP customers is to domicile cash
flows in USD on our books on behalf of Sudanese banks. These
arrangements were put in place in the context of the U.S. embargo
against Sudan ... The accounts of these banks were therefore opened
with the aim of "facilitating transfers of funds in USD for
Sudanese banks." This comment was made on the account
opening application forms of these banks. The funds in question
were then transferred, on the same day or at latest D+ 1 or 2 by the
[Regional Banks] to [U.S. correspondent banks].
24. Despite the warnings, BNPP's senior compliance personnel agreed to
continue the Sudanese business and rationalized the decision by stating that "the relationship
with this body of counterparties is a historical one andthe commercial stakes are significant. For
these reasons, Compliance does not want to stand in the way of maintaining this activity for
ECEP... "
25. As a result ofBNPP's conduct, the Government of Sudan and numerous
banks connected to the Government of Sudan, including SDNs, were able to access the U.S.
9
financial systemandengagein billionsofdollars' worthofU.S. dollar-basedfinancial
transactions, significantlyunderminingthe U.S. embargo.
26. Astheprincipalforeign bankforthe GovernmentofSudan, BNPPGeneva
had an essential role in theGovernmentofSudan'sfinancial stability. BNPPGenevaheld
accountsfor afinancial institutionownedbythe GovernmentofSudansince 1997for, among
otherpurposes, illicitU.S. dollarclearing.
27. Internal BankmemorandaregardingBNPP'sSudanesebusinessthat
discussedthepoliticalenvironmentandthe"crisisin Darfur"also discussedtheeconomic
environmentandtheSudaneseoil industry's"financialdynamism." Infact, manysenior
executivesatBNPPwerewell awareofthe crisis in Darfurandthe illicitrole Sudanhasplayed
in international issuesofconcern. BNPPofficialshavedescribedDarfuras a"humanitarian
catastrophe,"and, whilediscussingthe Sudanesebusiness, noted thatcertainSudanesebanks
"playapivotalpattin thesupportofthe Sudanese governmentwhich... has hostedOsamaBin
Ladenand refusestheUnitedNations intervention in Darfur."
Iran
28. From at least2002throughNovember2012,severalBNPParibas
branches, includingParis, London, Geneva,Romeand Milan, developedand implemented
policiesand proceduresto systematicallyconceal at least$160billion in U.S. dollar-
denominatedpaymentsonbehalfofIraniancustomers. Thesetransactionswereprocessedbythe
NewYorkBranchand otherNewYork-basedfinancial intuitions byuse ofacoverpayment
method.
29. BNPParibasusedpolicydirectives, suchas thosecontained in the
February2007Operating Application for Filtering ofTransactions under the Group Policy on
10
Iran, to ensurethatSWIFTMT202coverpaymentmessagesmeantto beprocessedthrough
NewYorkfrom BNPPreflectedonlythe identityofthe"receiving institution(and notthe
[ultimate] Iranian beneficiaryinstitution!)"(emphasis in theoriginal).
30. Bymakingthesetransactionsnontransparent, BNPPrendered itsNew
YorkBranchand otherNewYork-based financial institutions incapableofmakingand
maintainingrecordsofanysuchU.S. dollarpaymenttransactionthatclearedthroughthe
institution,and accordinglypreventedreviewofsuchrecords byregulatorsand authorities. In
thisway, BNPPalso rendered itsNewYorkBranchand otherNewYork-basedfinancial
institutionshelplessto detectpaymentsthatshouldhavebeenrejectedorblockedunderU.S.
law.
31. Usingits concealmentpractices, BNPPPariswas ableto maintain its
relationshipwithatleastone Iranian-controlledpetrochemicalclient("IranianPetrochemical
Client")from 2006through mostof2012,processingpaymentson its behalfin theamountof
approximatelyonehalfbillionU.S. dollars.
5
Thesepaymentsweremade in connectionwith
three lettersofcreditBNPP issued in 2006,2008and 2011.
32. BNPP's"knowyourcustomer"("KYC")documentationfor Iranian
PetrochemicalClientdemonstratedthatwhile itwasregisteredas acorporation in Dubai, itwas
whollyowned byan Iranianenergygroup based in Tehran, Iran, whichwas in turnfully
controlled and owned byan Iraniancitizen.
33. In 2010, BNPPrevealed to its regulatorsthatithadcommencedan
internal investigation into its compliancewith U.S. sanctions,pledgingimmediateremedial
5
ByNovember2008 therewas no legal method bywhichIranianPetrochemical ClientcouldhaveaccessedtheU.S.
financial system; nevertheless, by cove1ilyprocessingU.S. dollartransactions for it, BNPPfacilitated Iranian
Petrochemical Client'sabilityto trade in U.S. dollarsthrough November2012. Consequently,all transactions
betweenNovember2008 and November2012 were in directviolationofU.S. sanctions.
11
efforts and its full cooperation with U.S. and New York regulators and authorities. Nevertheless,
the Bank continued to process U.S. dollar-denominated transactions on behalf of Iranian
Petrochemical Client despite the warnings from two financial institutions that had rejected
transactions for Iranian Petrochemical Client as prohibited.
Cuba
34. Beginning from at least as early as 2000 and continuing through 20 I 0,
BNPP participated in eight Cuban Credit Facilities that involved U.S. dollar clearing valued at
more than $7 billion and that were not licensed by OF AC. The Cuban Credit Facilities were
managed out of BNPP Paris, and each facility processed hundreds (and in some cases thousands)
of U.S. dollar transactions in violation of U.S. sanctions. One such credit facility involved U.S.
dollar loans for one of Cuba's largest state-owned commercial companies which was an SDN.
35. BNPP was fully aware of the legal risks. In a January 2006 internal email,
one employee at BNPP Paris asked a BNP Paribas compliance officer, "when we lend money to
the Cubans, the loans are generally made out in [ d]ollars ... [ c ]ould we be reprimanded, and if so,
based on what?" The compliance officer responded to that employee and others, including a
senior manager at BNPP Paris: "These processing transactions obliges us to obscure information
regarding the USD (BNPP NY) Clearer, and it is a position which BNPP is not comfotiable with,
and which, of course, offers a risk to its image and, potentially, a risk for reprisals from US
authorities if this behavior was discovered ... "
36. With a book-to-book, bank-to-bank scheme, BNPP Paris and its
sanctioned Cuban clients obscured from regulators and authorities the access provided to the
U.S. financial system. In an April2000 credit application for one of the Cuban Credit Facilities,
12
twoBNPPParisemployeesacknowledged in atleastonecasethatthe sole motivatingfactor for
usingthesedeceptivestructureswasthe"[!]ega! risklinkedto theAmericanembargo."
37. BNPPParisand its Cubanclientseachheldaccountsatan unaffiliated
Frenchbankso thatatransaction between aCubanparty'saccountand an accountheldatthe
samebankbyBNPPPariswas recorded as abook-to-bookfunds transfer. Suchtransactions
createdno evidenceofBNPP'sfunds clearingin U.S. dollarsfortheSanctioned CubanParties.
In aseparatestep, however, BNPPParistransferredtheU.S. dollars(clearedon its own behalf
through its NewYorkBranchoranotherNewYork-basedfinancial institution). Theywentfrom
BNPPParis' accountatthe unaffiliatedFrenchbankto atransitaccountheldatBNPP'sParis
branch in abank-to-banktransfer. SometimesskippingthestepofdepositingU.S. dollarfunds
intothetransitaccount, BNPPParibaswouldeitherinitially-- orwithinabriefperiodoftime--
forward thosefunds to theCubanParties' accounts.
38. Forthemostpart,wiremessagesforthe CubanCreditFacilitiesthatwere
processedthroughBNPP'sNewYorkBranchmade no referenceto CubaoraSanctionedCuban
Party. BNPPParisgaveCubanclientsand otherparticipantsofthecreditfacilities clear
instructionsto refrain from doingso. In oneemail communication,aBNPP Parisemployee
directed the representativeofaSanctionedCubanPartyto omitthenameofaCubanbankon a
SWIFTpaymentmessage; otherwise,the BNPPParisemployeewarned,"these[] funds riskto be
stoppedbyUnited State[s]furtherto theembargo."Takingheed,theemployeeofthe Sanctioned
CubanPartyrepliedthathewould indeedcancelthe existingwiremessage, and executeone
"followingyourinstructions."
39. Whenreferencesto Cubaaccidentallyappeared in threepayment
instructionsdispatchedtothe U.S., BNPPstaffstrippedreferencesto Cubaand resubmitted
13
SWIFTmessagesto replacethosethathad been detectedand blocked. Areplacementmessage,
nowvoid ofanyreferenceto CubawasthensentbyBNPPto anunaffiliatedU.S. bank.
40. TheBankstructuredresubmittedpaymentsso thatdollaramountscould
notbe matchedand onceagainblocked in theU.S. Toensurethattheirresubmissions were not
detected bythe U.S., BNPPParis staff,onat leastoneoccasion,combinedthedollaramounts of
threepayments intojustonestrippedmessage, aggregatingthetotalvalueoftheoriginalthree in
theresubmitted replacementmessage. Thispreventedthepossibilityofmatchingthedollar-
amountmatchto thethreepreviouslyrejected messages. Theextentofthe Bank'sdeceptionwas
demonstrated byoneseniorattorneyatBNPP'sParisheadquarters in early2006: "[m]yconcern
comesfrom the fact thatwe cannotruleoutthatwewould haveto explainto OFACthatthis is
partofalongstandingfacilitywithCubanentities. Couldthattriggeraretroactive investigation
ofall priorpayments...?"
41. In late2006andearly2007, BNPPPariscompliancepersonneltriedto
persuadetheBankto converttheU.S. dollarCubanCreditFacilitiesto anothercurrency, suchas
Euros. Nevetiheless,someoftheCubanCreditFacilitiesremaineddenominated in U.S. dollars
forseveral years, with oneoperatingin U.S. dollars until 2010. Senioremployeesat BNPP
Paris, includingthe Bank'sthen-GroupHeadofECEP,allowedthesecreditfacilitiesto operate
in U.S. dollars, in violationofU.S. law, dueto BNPP'slongrelationships withtheCubanParties
and calculatedcoststo theBankin attemptingto converttheircreditfacilities to Euro-
denominated loans. In amemo issuedatthe endof2009,oneECEPemployeereferenced an
existingCubanPartyas a"historicclient,"a"majorplayerin the Cubaneconomy,"and a
"strategiccustomerwithwhomwe intendto arrangenewfinancingsecuredbyoffshoreflows."
14
42. In January 2007, the head of compliance at BNPP Paris received a
memorandum entitled Respect ofCuban Embargo, acknowledging that BNPP had been
systematically bypassing the U.S. sanctions against Cuba by permitting Cuban Parties to borrow
U.S. dollars. The memorandum concluded that "[t]otal transparency is not currently possible"
because"[c ]hanging the payment currency during the process with a pool of participants would
be long and costly." Just a few months later, a compliance officer at BNPP Paris sent a memo to
senior BNPP Paris compliance and ECEP personnel entitled Compliance with the Cuba
embargo. The memo set forth two possibilities for dealing with a Cuban Credit Facility that was
still dollar denominated: (1) "[s]et this facility aside from the official inventory with regard to
the US so long as it cannot be converted into Euros or another currency;" or (2) "[i]f Group
Compliance needs to be totally transparent with regard to the US authorities, the facility currency
will have to be modified ... [T]his option would trigger off an onerous process of negotiations with
the banks and the borrowers, and ECEP will not have total control over the outcome: our
decision to be OF AC compliant is a minor concern for the other parties." In the end, the memo
concluded, "[g]iven its marginal character, we suggest that this facility should be kept silent, it is
totally discreet and is reimbursed via internal wire transfers."
Violations of the Banking Law and Regulations
43. BNPP failed to maintain or make available at its New York Branch true
and accurate books, accounts and records reflecting all transactions and actions in violation of
Banking Law 200-c.
44. BNPP officers, directors, and employees made false entries in BNPP's
books, reports and statements and willfully omitted to make true entries of material particularly
pertaining to the U.S. dollar clearing business ofBNPP at its New York Branch with the intent to
15
deceivetheSuperintendentandexaminersoftheDepatimentand representativesofotherU.S.
regulatoryagencieswhowerelawfullyappointedto examineBNPP'sconditionsandaffairsatits
NewYorkBranchin violationofBankingLaw672.1.
45. TheDepartment'sregulation, 3NYCRR300.1,requiresBNPPto submit
areporttothe Superintendentimmediatelyuponthediscoveryoffraud, dishonesty, makingof
false entriesandomissionoftrueentries, and othermisconduct,whetherornotacriminal
offense, in whichanyBNPPemployeewas involved. Itknowinglyfailed todo so forseveral
years.
46. In 2004,ajointexaminationbytheDepartment'spredecessoragencyand
the Federal ReserveBankofNewYork("FRB-NY") identifiedsystemicfailures in BNPP's
compliancewithBankSecrecyActandAnti-MoneyLaundering(BSA/AML)requirements. Of
patiicularnoteweredeficiencies inmonitoringbyBNPP'sNewYorkBranchoftheBank's
correspondentbankingrelationshipswith overseasclients, includingits processingofU.S.
dollar-denominatedtransactions. Basedontheregulators' findings, BNPPvoluntarilyentered
into aMemorandumofUnderstanding,datedSeptember 16, 2004(the"2004MOU"),withthe
Departmentand theFRB-NY,vowingto remediate, amongotherthings,BNPP'ssystemsfor
compliancewithBSA/AMLrequirements.
47. Instead,the Bankconcealeditscontinuingviolationsfrom theregulators
and authorities in NewYork. Duringthatsame2004period, internaldocumentsobtainedfrom
the BankdemonstratethatBNPP'smostsenioroperations, complianceand legal staffknewof
the Bank'sserous illegal conductin violationoflawsand regulations, and, ratherthan reportthe
conductto the Bank'sregulators, activelysupported it.
16
48. In 2004, BNPP executives from its Paris headquarters and its Geneva
branch met on the subject of U.S. embargoes "against sensitive countries (Sudan, Libya,
Syria...)" and their impact on BNPP's business. To shield the New York Branch from potential
regulatory enforcement actions, BNPP officials fashioned a solution whereby BNPP Geneva
would use an unaffiliated U.S. bank to conduct illicit U.S. dollar-denominated transactions for
Sanctioned Parties. In this way, "the problem" of violating U.S. sanctions "shifted" to the
unaffiliated U.S. bank.
49. Although BNPP Geneva executives were warned by a BNPP Geneva
compliance officer that clearing through an unaffiliated U.S. bank in this manner could be
viewed as a "serious breach" and a "grave violation," the practice continued throughout the
Review Period.
50. On March 3, 2008, the Department and FRB-NY terminated the 2004
MOU finding the Bank compliant in all cited areas of concern. The termination letter was
addressed to, among others, BNPP's then-Group Head of Compliance. The Bank was fully
aware that the 2004 MOU's termination was based on falsified facts. The then-Group Head of
Compliance knew and remained silent about BNPP's continuing and longstanding efforts to
conduct secret transactions for Sanctioned Parties, such as Cuba. In September 2008, a more
junior compliance officer emailed the then-Group Head of Compliance and other compliance
staff that "[The Cuban Credit Facility], for which [BNPP had] for two years now been putting
pressure on ECEP to have the USD reference abandoned, is more or less at a dead-end, and we
know it will be impossible to modify without giving up something in exchange ... [T]he
subsistence of [the Cuban Credit Facility] in USD []prevents [BNPP's] situation on Cuba from
being totally 'compliant."'
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Settlement Provisions
Monetary Payment:
51. BNPParibas shallmakepaymentofacivilmonetarypenaltyto the
DepartmentpursuanttoBankingLaw44 in the amountof$2,243,400,000.00. BNPParibas
shallpaytheentireamountwithinthirty(30) days ofexecutingtheConsentOrder. BNPParibas
agreesthatitwill notclaim,assert,orapplyforataxdeductionortaxcreditwithregardto any
U.S. federal, stateorlocal tax, directlyorindirectly, for anyportionofthecivilmonetarypenalty
paidpursuanttothisConsentOrder.
52. Additionally,BNPPshall makepaymentofreparationsandrestitutionto
theDepartmentandtheStateof NewYorkin the amountof$1,050,000,000.00for injurycaused
by its wrongful conduct. This amountwill besatisfiedbytheBank'spaymenttotheNewYork
CountyDistrictAttorney("DANY")pursuantto theJune 30, 2014pleaagreementbetweenthe
Bankand DANY. Theforfeiture ofsuchfunds is pursuantto CPLR1349 and anysubsequent
distributionofsuchfunds shall begovernedbythetermsoftheJune30,2014Agreementto
Escrowand DistributeForfeitureFunds entered into betweenDANYandtheStateofNewYork.
Suspension of U.S. Dollar Clearing:
53. OntheeffectivedateofthisOrder, BNPParibasshallbegintakingstepsto
implementtheoneyear-longsuspensionofU.S. DollarclearingservicesthroughitsNewYork
Branchdescribed in this section(the"Suspension"). TheSuspensionshall beginonJanuary 1,
2015 and terminateon December31,2015 andshall encompassthe following:
A. Suspensionofall U.S. dollarclearingbytheNewYorkBranchon
behalfofBNPPGeneva, BNPPParisand BNPPSingaporefortheoil and gas
Energy& CommodityFinancebusiness;
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B. Suspensionofall U.S. dollarclearingbytheNewYorkBranchon
behalfofBNPPMilanfor itsoil and gasTradeFinancebusiness and forother
TradeFinancebusinessatBNPPMilan;
C. Suspensionofall U.S. dollarclearingbytheNewYorkBranchon
behalfofBNPP'sRomeoperationfor oil and gasrelatedclients; and
D. Suspensionofall U.S. dollarclearingbytheNewYorkBranchof
deposits byunaffiliatedthird-partybanks atBNPPLondon.
54. Additionally,theBankagreesto aprohibition,for aperiodoftwenty-four
(24) monthsfrom thedateofthisAgreement,ofU.S. dollarclearingas acorrespondentbankfor
unaffiliatedthird partybanks in NewYorkandLondon.
55. AvoidanceofSuspension:
BNPPshallnotavoidorcircumventthe Suspensionbyusing
anyBNPPbranch,affiliate, subsidiaryorentity in whichBNPP
hasacontrollinginterestin theUnited States for U.S. Dollar
Clearing.
BNPP shall notavoid orcircumventtheSuspensionby
moving,orcausingto bemoved,anyclientrelationshipor
businessto anyotherbusiness line, branchoraffiliateof
BNPP.
Extension of Independent Consultant:
56. TheBank,theNewYorkBranchandthe Departmententered into a
MemorandumofUnderstanding,dated August 19,2013(the"2013 MOU")to install an
independentconsultant("IC")onsiteattheNewYorkBranchto conductareviewofthe
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BSA/AMLand OFACcomplianceprograms,policiesand proceduresin placeattheBranch.
Thepartiesnowagreeto extendtheIC'sengagementforan additionaltwoyears. In additionto
theterms and conditionsofthe2013 MOU, the IC willoversee, evaluateand testBNPP's
remediationefforts,theimplementationofBNPP'seffortsto streamlinetheglobal U.S. dollar
clearingthroughtheNewYorkBranchand theU.S. dollarsuspensionrequirementscontainedin
thisagreement.
Discipline of BNP Pari bas Employees:
57. Atthe directionoftheDepartment,the following individualswere
terminatedbyorseparatedfrom theBankas aresultoftheinvestigation: (1)theformer Group
HeadofCompliance;(2)theformerGroupChiefOperatingOfficer; (3)theformerHeadof
Ethicsand ComplianceNorthAmerica; (4)theformerGroupHeadofStructuredFinanceforthe
CorporateInvestmentBank("CIB")and former GroupHeadofECEP;(5) theformer Group
HeadofDebtCapitalMarkets; (6) aformerattorneyofBNPParibas'sCIB Legal Department;
(7)aformerfrontofficeemployeein Parisand Genevawithresponsibilityfor an Iranianclient;
(8) aformerrelationship managerin Genevawith responsibilityfor aclientengaged in Sudanese
business; (9) aformerfrontofficesupervisorin Genevawith responsibilityforaclientengaged
in Sudanesebusiness;(I0) aformermanagerin Genevawithresponsibilityforaclientengaged
in Sudanesebusiness; (11) aformersenioremployeein Genevawithresponsibilityfor clients
engaged in Iranianbusiness; (12)aformeremployeeofECEPwithresponsibilityforclients
engaged in Sudanesebusiness, and (13) aformeraccountofficerin Genevawith responsibility
foraclientengagedSudanesebusiness. Intotal, theBankdisciplined45 employees in
connectionwith this investigation,with levelsofdisciplinerangingfrom termination,to cuts in
compensation,demotion, mandatorytrainingsessionsand warnings.
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58. BNPPshall notin the future, directlyorindirectly,retainanyofthe
individualsreferenced in theparagraphabove, as eitheran officer,employee,agent,consultant,
contractorofBNPP,oranyaffiliateofBNPP,orin anyothercapacity. Thisrestrictionalso
appliesto anycurrentorformeremployeewho is eitherseparatedfrom theBankorwhose
employmentis terminatedbytheBankas aresultofanyfuture formal disciplinaryaction in
connectionwiththis investigation.
Breach of the Consent Order:
59. IntheeventthattheDepartmentbelievesBNPPtobe materiallyin breach
ofthe ConsentOrder("Breach"),theDepartmentwill providewrittennoticetoBNPPofthe
Breachand BNPPmust,withinten(1 0) businessdays from thedate ofreceiptofsaid notice, or
ona laterdate ifso determined in thesolediscretionoftheDepartment,appearbeforethe
Departmentto demonstratethatno Breachhas occurredor,to the extentpertinent,thatthe
Breachis notmaterial orhas beencured.
60. ThePartiesunderstandandagreethatBNPP'sfailuretomaketherequired
demonstrationwithinthe specifiedperiod is presumptiveevidenceofBNPP'sBreach. Upona
findingofBreach,theDepartmenthas all theremediesavailableto it underNewYorkBanking
and Financial ServicesLawand mayuse anyand all evidenceavailableto theDepartmentforall
ensuinghearings, notices, ordersandotherremediesthatmaybeavailableundertheNewYork
Bankingand Financial Services Laws.
Waiver of Rights:
61. ThePartiesfurther understandand agreethatno provisionoftheConsent
Orderis subjectto reviewin anycourtortribunal outsidetheDepartment.
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Parties Bound by the Consent Order:
62. It is fmiher understoodthattheConsentOrderis bindingonthe
Departmentand BNPP,as well as theirsuccessorsandassignsthatare withinthe supervisionof
theDepartment, butit specificallydoesnotbindanyfederal orotherstateagenciesoranylaw
enforcementauthority.
63. Nofurtheractionwill betakenbytheDepartmentagainstBNPPforthe
conductsetforth in the ConsentOrder, providedthatBNPPcomplieswiththetermsofthe
ConsentOrder.
64. Notwithstandinganyotherprovisioncontained in theConsentOrder,
however, theDepartmentmayundertakeactionagainstBNPPfortransactionsofconductthat
BNPPdid notdiscloseto theDepartmentin thewrittenmaterialsthatBNPPsubmittedto the
Departmentin connectionwiththismatter.
Notices:
65. Allcommunicationsregardingthis Ordershall be sentto:
ElizabethNochlin
AssistantCounsel
BankingDivision
NewYorkStateDepartmentofFinancial Services
One StateStreet
NewYork,NY I0004
MeganPrendergast
AssistantCounsel
BankingDivision
NewYorkStateDepartmentofFinancial Services
OneStateStreet
NewYork,NY I0004
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GeorgesDirani
GroupGeneralCounsel
BNPParibas S.A.
12RueChauchat
75450ParisCEDEX09, France
Miscellaneous:
66. EachprovisionoftheConsentOrderwill remaineffectiveandenforceable
until stayed, modified,terminatedorsuspended in writingbytheDepartment.
67. Nopromise,assurance,representation,orunderstandingotherthanthose
contained in theConsentOrderhas beenmadeto induceanypartyto agreetotheprovisionsof
theConsentOrder.
IN WITNESS WHEREOF,the partiesheretohavecausedthisConsentOrderto
beexecutedas ofthis2.<3 dayofJune, 2014.
BNPParibas NewYorkStateDepartment
ofFinancialServices
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