An Indian link emerged today in the biggest ever USD 8.97 billion financial settlement reached by French banking giant BNP Paribas with the US authorities for dealing with Iran and other sanction-hit countries.
Under the settlement reached with the US Department of Justice, Department of Treasury and the Federal Reserve among others, BNP Paribas agreed to plead guilty and pay USD 8.9 billion for illegally processing financial transactions for clients in countries subject to the US economic sanctions.
According to statements issued by various US authorities, BNP Paribas concealed over USD 190 billion worth transactions for clients in these countries, including Iran, Sudan and Cuba, with knowledge of multiple senior executives.
As per details released by the US Department of Justice about violations of Iran sanctions, the bank processed payments from 2006 to 2012 on behalf of an Iranian Controlled Company in connection with three letters of credit that facilitated the provision of liquefied petroleum gas (LPG) to an entity in Iraq.
"In June 2012, a BNP Paribas Paris compliance officer noted that this Iranian Controlled Company was sending payments from its account at BNPP Paris to its account at an Indian bank with 'known links to Iran'.
"Nevertheless, despite these warnings -- and despite claiming to be cooperating fully with the Government's investigation into sanctions violations -- BNPP continued to process US dollar transactions for Iranian Controlled Company until November 2012," the Justice Department said.
However, the DoJ document did not name the Indian bank, neither the 'Iranian Controlled Company'.
As a result of these and many violations, BNP Paribas will pay USD 8.97 billion to federal and state authorities, terminate senior executives, and suspend US dollar clearing operations for one year at business lines in which the misconduct centered.
This is the biggest ever fine paid by a bank for violations of the US economic sanctions, while the Indian-origin US Attorney Preet Bharara said the bank "perpetrated what was truly a Tour de Fraud."
BNP Paribas has a presence in 75 countries, including in India, with more than 180,000 employees and its businesses include retail, corporate and investment banking.
Commenting on the settlement BNP Paribas CEO Jean-Laurent Bonnafe said, "We deeply regret the past misconduct that led to this settlement. The failures that have come to light in the course of this investigation run contrary to the principles on which BNP Paribas has always sought to operate.
He also announced a comprehensive plan to strengthen the bank's internal controls and processes.
