Paris-based BNP Paribas SA (BNPQY - Free Report) is gearing up for up to $9 billion settlement associated with money-laundering charges. Further, the bank would be required to plead guilty to a criminal charge of conspiring for violation of the International Emergency Economic Powers Act. The news was first reported by the Wall Street Journal.
The terms of the settlement would likely include a temporary ban on BNP Paribas’ ability to transact in U.S. dollars. Further, the law enforcement agencies are seeking termination of roughly 30 bank employees (majority already left).
BNP Paribas’ dealings amounting to $30 billion with sanctioned countries including Sudan, Iran and Cuba are under probe. Majority of the transactions pertained to Sudan, while quite a number of fund transfers referred to Iran and other sanctioned countries.
BNP Paribas allegedly used regional overseas banks to route transactions with the sanctioned countries. Further, the company deliberately concealed such transactions from the U.S. Treasury Department's screening system by various methods.
Notably, the agencies involved in investigation are the Federal Bureau of Investigation, offices of Manhattan U.S. Attorney and Manhattan District Attorney, the U.S. Justice Department and New York Department of Financial Services.
Nevertheless, although the mediation talks are expected to finalize soon, the actual terms of the settlement are subject to change, thereby delaying the announcement. Further, there lays a possibility of the talks hitting a deadlock and the deal falling apart. In that case, BNP Paribas could have to face a lawsuit for criminal conspiracy.
BNP Paribas is not the only foreign bank to be prosecuted on money-laundering charges. The U.S. subsidiaries of many global banks including those of HSBC Holdings plc (HSBC - Free Report) , ING Groep NV (ING - Free Report) and Barclays PLC (BCS - Free Report) have already settled similar charges brought by the law-enforcement agencies.
For BNP Paribas, the magnitude of penalty could significantly hurt its performance. Though the company is one of the stronger European banks, the overall macroeconomic scenario, coupled with the above-mentioned fine could weigh on the bottom line.
Currently, BNP Paribas carries a Zacks Rank #4 (Sell).