Published On: Mon, Jul 14th, 2014

Guilty plea by French bank for Cuba sanctions evasion may be the tip of an iceberg

BNP-ParibasNEW YORK, USA - A plea agreement in Manhattan federal court last week requiring French bank BNP Paribas (BNP), a global financial institution headquartered in Paris, to forfeit more than $8.8 billion and to pay a criminal fine of $140 million for its role in processing billions of dollars of US dollar transactions through the US financial system on behalf of Cuban and other entities subject to US economic sanctions may be just the tip of the iceberg.

According to a US government source with knowledge of the matter, the US, in concert with its “Five-Eyes” allies – Britain, Canada, Australia and New Zealand – intends to expand its enforcement of suspected abuse of the global banking system to crack down on not just sanctions evasion and terrorism financing but also a wide range of financial crimes.

In particular, regional banks that facilitate fraud, theft and money laundering using correspondent banks in the US will now become the objects of increased scrutiny and punitive action by American authorities.

Money laundering and the evasion of sanctions by international banks are by no means new allegations. Prior to BNP’s settlement, a string of banks – including HSBC, Credit Suisse, Barclays and Standard Chartered – admitted they had engaged in similar illegal transactions on behalf of Cuba, Iran, Libya, Sudan and other countries or sanctioned entities within those countries.

And it is not just US federal courts that are assuming jurisdiction over international financial crimes and related disputes. In 2012, the Appellate Division of the Supreme Court of New York stated in a majority opinion that "New York has a compelling interest in adjudicating controversies that implicate its preeminent position in the international banking system.”

In recent years, banks in the Cayman Islands and The Bahamas, along with several other Caribbean countries, have had a demonstrable involvement in as yet unresolved thefts and fraud using US correspondent banks to move US dollars.

These banks may soon find themselves subject to the same scrutiny and significant financial penalties as BNP.

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