The Swiss Financial Market Supervisory Authority (FINMA) has concluded that the Swiss branch of French bank BNP Paribas “repeatedly and seriously violated its duty to identify, limit and monitor the inherent risks, subsequently breaching supervisory provisions”.
FINMA’s enforcement proceedings focused on the bank’s compliance with United States sanctions, especially those issued against Sudan.
On Monday, BNP Paribas pled guilty to two criminal charges and agreed to pay almost $9 billion (CHF8 billion) to resolve allegations it violated US sanctions laws and enabled the activities of terrorists and humans rights abusers in Sudan and elsewhere.
In a statement on Tuesday, FINMA revealed that, particularly in the case of Sudan, the bank had ignored and violated US sanctions up to 2011, particularly during the period from 2002 and 2007.
The FINMA probe found that Sudanese and Iranian clients had instructed BNP Suisse to avoid any references to Sudan and actual clients when handling transactions in order to avoid payment transactions getting blocked by international payment transaction filters. BNP Paribas Suisse followed those instructions, thus allowing the settlement of payments.
In addition, BNP Suisse made transactions for Sudanese clients using accounts managed by a third bank. BNP switched to a third-party US clearer and inserted third-party banks between it and the client. The US bank therefore did not recognise that Sudanese clients were involved in the transactions.
BNP Paribas Suisse also made a “considerable number” of exchange transactions outside the US for clients affected by the embargo. The transactions were concealed by BNP Suisse and BNP Paris. “By acting in this manner, the background and involvement of Sudanese clients were not evident to third parties,” FINMA said.
BNP Suisse was also found to have provided a large amount of credit to finance Sudanese oil trading. Here it was also the case that the bank managed to conceal payments involving the Sudan from third parties.
Violation of governance rules
FINMA concluded that the bank had “seriously violated its duty to identify, limit and monitor the risks involved in making transactions with business partners in countries under US sanctions”.
It added the bank had exposed itself to “unduly high legal and reputational risks” and violated requirements for adequate organisation under Swiss supervisory law.
On the other hand, FINMA found no indications of Swiss sanctions having been breached.
The supervisory authority said it would also order additional capital adequacy requirements for operational risks and a two-year ban on conducting business with companies and persons under EU and/or US sanctions.
It will also continue examining to what extent the board of directors, management and other BNP Suisse employees were involved in the misconduct.