BNP Paribas SA’s possible fine in the U.S. for doing business with sanctioned countries shows that European banks need to ensure their compliance with evolving American rules, Bank of France Governor Christian Noyer said.
U.S. authorities are seeking a record fine against BNP Paribas (BNP) that would make it the first French bank since President Barack Obama took office to be penalized for activities in countries slapped by American sanctions. BNP hasn’t breached any European rules, Noyer said.
“It’s important that European banks are vigilant on this subject because, since the change in the U.S. decree in the second half of the 2000s, all operations done in dollars need to conform with American regulations,” Noyer told journalists today in Paris. “We’re very carefully following the risks related to this evolution in American jurisprudence.”
The remarks are the first made by French authorities on the case. BNP, which is under investigation for transactions involving Sudan, Iran and Cuba, may be asked to pay more than $5 billion to resolve the matter, the highest sanctions-violation penalty ever, two people familiar with the talks have said.
Prosecutors are also seeking a guilty plea, the people said, after winning one from Credit Suisse Group AG (CSGN) this week to end a three-year tax investigation. An agreement on BNP, France’s largest bank, could come as soon as next month, according to the people, who asked not to be identified because the talks are private.
Stephane Le Foll, the cabinet minister who is the French government’s spokesman, declined to comment on the BNP case when asked about it two days ago at his weekly press conference.
The French government hasn’t been involved in the U.S. discussions over Paris-based BNP and views the case as a legal matter that must follow its own course, according to three people familiar with the government’s position.
Noyer declined to say whether he has been in touch with U.S. authorities on the matter.
BNP said in 2011 that it was reviewing operations to see how they complied with the Office of Foreign Assets Control’s rules after talks with the U.S. authorities. OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals. The bank’s review focused on transactions made between 2002 and 2009, BNP said last week.
Prosecutors argue that a more severe penalty against BNP is justified because the misconduct was more egregious and the bank didn’t fully cooperate with the investigation, according to one person with knowledge of the matter.
BNP said on April 30 that it may need to pay far more than the $1.1 billion it set aside for the matter.
Noyer said BNP hasn’t violated any sanctions rules at home and in Europe.
“We have verified that all transactions conformed with European and French laws and rules,” he said. “None were broken.”
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