BNP Record Penalty Ends U.S. Sanctions Probe: Timeline

BNP Paribas SA’s record $8.97-billion U.S. penalty, which also includes a guilty plea and a one-year suspension of some of its dollar-clearing activities, concludes a years-long probe into unauthorized transactions with countries including Sudan and Iran.

The following is a timeline from 2004 to June 30.

September 2004: BNP signs a memorandum of understanding with the Federal Reserve Bank of New York and New York State Banking Department requiring its New York business to improve systems for compliance with U.S. bank secrecy and sanctions laws.

October 2004: BNP receives an erroneous legal opinion from a U.S. law firm suggesting the bank can protect itself from being penalized by U.S. authorities if it conducts prohibited transactions through another U.S. bank, rather than its own New York branch, according to the statement of facts published by the Justice Department yesterday.

December 2004: BNP creates a global compliance department, to be headed by Vivien Levy-Garboua, reporting directly to then-Chief Executive Officer Baudouin Prot.

December 2005: ABN Amro Bank NV agrees to pay $80 million in penalties for violating U.S. rules by processing wire transfers and other transactions for state-run banks in Iran and Libya.

February 2006: BNP says in an annual filing that its financial security unit, part of compliance, broadened its scope “to incorporate U.S. embargoes previously managed in New York.”

July 2006: BNP issues a policy across all subsidiaries and branches that acknowledges the applicability of U.S. sanctions to non-U.S. banks, according to the DOJ’s statement of facts.

September 2006: U.S. Treasury Undersecretary Stuart Levey meets officials of French banks, including BNP, as he tours Europe to warn governments and companies to crack down on funds used by Iran and other countries to support terrorism and nuclear proliferation.

March 26, 2007: BNP’s Energy, Commodities, Export & Project Finance business had revenue of more than 1.2 billion euros ($1.64 billion) in 2006, and 19 percent average annual growth since 2003, according to a presentation by Dominique Remy, head of that business.

May 2007: Senior officials at the U.S. Treasury Department’s Office of Foreign Assets Control meet with executives at BNP in New York to express concern BNP in Geneva was conducting U.S. dollar business with Sudan in violation of U.S. sanctions. OFAC requests BNP to conduct an internal investigation.

June 2007: BNP stops its dollar clearing business with Sudan.

Sept. 1, 2008: BNP shuffles its senior management. Jean Clamon, formerly co-chief operating officer, becomes managing director and replaces Levy-Garboua as global head of compliance. Jean-Laurent Bonnafe becomes co-COO.

Early 2010: The New York County District Attorney’s Office and U.S. Department of Justice approach BNP about involvement in transactions with sanctioned entities. While agreeing to conduct an internal review into its compliance and cooperate fully with U.S. authorities, BNP continued to process dollar transactions on behalf of an Iranian controlled company, according to the DOJ’s statement of facts.

March 2010: BNP says in its annual report it’s discussing with U.S. authorities “a possible retrospective internal review of certain U.S. dollar payments involving countries, persons or entities” subject to sanctions.

March 2011: BNP says it decided to conduct an internal review of the U.S. dollar transactions following discussions with the Justice Department and the New York County District Attorney’s Office, according to its annual report.

Dec. 1, 2011: Bonnafe takes over as CEO from Prot, who succeeds Michel Pebereau as BNP’s chairman. Pebereau remains as a board director and honorary chairman.

March 30, 2012: Philippe de Gentile, BNP’s global head of energy & commodity finance, adds the role of head of structured finance in Switzerland, replacing Jacques-Olivier Thomann. The latter remains as a counselor to the bank.

June 2012: ING Groep NV agrees to pay $619 million to settle U.S. charges it falsified financial records to bypass sanctions on countries including Cuba and Iran.

July 16, 2012: Remy is appointed head of BNP Paribas Fortis corporate and investment banking in Brussels, replacing Jean-Yves Fillion. Remy will also be supervising corporate banking throughout Europe.

August 2012: Benjamin Lawsky, New York’s top banking regulator, breaks ranks with other authorities in a sanctions case against London-based Standard Chartered Plc. The bank settles with the regulator for $340 million that month after Lawsky threatens to withdraw its license.

November 2012: BNP stops processing dollar transactions for an Iranian controlled company, the DOJ’s statement of facts shows.

December 2012: Standard Chartered pays an additional $327 million of fines to settle with other U.S. authorities for violating sanctions with Iran. HSBC Holdings Plc agrees to pay $1.92 billion to settle U.S. probes of money laundering.

March 2013: BNP’s internal review covers “a significant volume” of U.S. dollar transactions with sanctioned countries, the bank says in its annual report.

Mid-2013: BNP hires New York-based law firm Sullivan & Cromwell LLP as lead counsel in the probe, replacing Robert Bennett, whose team at Hogan Lovells is relegated to secondary status, two people familiar with the matter said. Karen Patton Seymour becomes the bank’s primary point of contact with the U.S. government.

December 2013: BNP Paribas hands the results of its internal review to U.S. authorities, according to a memo seen by Bloomberg News. The review covered dollar transactions made between 2002 and 2009 with countries subject to U.S. embargoes. Prosecutors lean toward filing criminal charges because of the extent of the violations, according to two people familiar with the matter.

Late 2013: Lawsky installs a monitor, Shirah Neiman, at BNP’s New York offices.

Feb. 13, 2014: BNP says it set aside $1.1 billion for the case in the fourth quarter. The same day, Chief Financial Officer Lars Machenil says in a Bloomberg Television interview that the final settlement “could be very different from the one we have provisioned.”

March 31, 2014: Preet Bharara, the U.S. Attorney for the Southern District of New York, in a speech expresses skepticism over dire warnings of unforeseen consequences of a criminal charge against a bank.

April 30, 2014: BNP reports first-quarter profit of 1.67 billion euros and says that fines related to the probe “could be far in excess” of the $1.1 billion it had set aside.

May 5, 2014: U.S. Attorney General Eric Holder, in a video, says that prosecutors are seeking guilty pleas from banks in certain cases, a departure from the Justice Department’s previous approach.

Early May 2014: Bonnafe and other BNP executives travel to New York and Washington to meet with officials involved in the probe.

May 14, 2014: Bonnafe tells shareholders at the annual meeting there is “very high uncertainty over the sanctions and namely over the amount of the penalty.”

May 19, 2014: Credit Suisse Group AG agrees to pay $2.6 billion in penalties and its main banking unit pleads guilty to helping Americans cheat their taxes, making it the first global bank in a decade to admit to a crime in a U.S. courtroom.

May 23, 2014: Bank of France Governor Christian Noyer says that all of BNP’s transactions “conformed with European and French laws and rules.”

May 29, 2014: Bloomberg News and other media report that U.S. authorities have demanded BNP pay more than $10 billion in penalties, plead guilty, and agree to a temporary suspension of U.S. dollar-clearing activities.

May 30, 2014: France’s right-wing National Front Party calls on the government to “defend the national interests” in the case. The National Front accuses the U.S. of “racketeering.”

May 30, 2014: Bloomberg News reports that about 30 executives who worked at BNP’s energy and commodities finance unit in Geneva and Paris have resigned, gone on leave, been fired or relocated since 2012. Remy, who had run the business, left the bank in previous weeks. De Gentile left his post at the end of 2013 and Thomann was no longer at the bank.

June 2, 2014: BNP coaches bankers to tell clients it’s making every effort to ensure their business won’t be disrupted if the bank’s U.S. dollar-clearing operations are halted, according to a memo seen by Bloomberg News.

June 5, 2014: U.S. President Barack Obama, set to visit France to mark the 70th anniversary of the D-Day landings, says he won’t interfere with the BNP case. That night, French President Francois Hollande raises the BNP issue with Obama at a dinner in Paris.

June 12, 2014: BNP says that Co-COO Georges Chodron de Courcel, 64, who has overseen corporate and investment banking for more than a decade, will retire. BNP also confirms that Remy left the bank.

June 30: BNP admitted in court documents to processing almost $9 billion in banned transactions from 2004 to 2012 involving Sudan, Iran and Cuba. The company will be barred from U.S. dollar-clearing operations for one year for its oil and gas commodity finance business, and it promised not to employ 13 key executives.

Before it's here, it's on the Bloomberg Terminal.