BNP said to move compliance operations to U.S. as settlement nears

Tue Jun 24, 2014 6:53pm EDT
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By Karen Freifeld, Aruna Viswanatha and Steve Slater

NEW YORK/WASHINGTON (Reuters) - BNP Paribas SA is relocating its U.S. sanctions compliance operations to New York from Paris, ahead of a nearly $9 billion settlement it is expected to reach with U.S. authorities over violations of sanctions on Sudan and other countries, according to people familiar with the matter.

The move is not specifically part of the settlement agreement being hammered out. But France's largest bank decided to transfer the operations as part of its efforts to improve compliance and proactively appease U.S. regulators, according to one of four sources interviewed by Reuters.

Sanctions compliance involves screening and analyzing transactions to make sure they don't run afoul of U.S. laws that bar moving money on behalf of certain designated parties, including those in Iran and Sudan.

Some people familiar with the move described it as unique, though it is unclear how much further BNP is going than other foreign banks, some of whom have their global sanctions compliance heads in New York.

BNP's action is part of a trend by banks to bolster their compliance operations in the United States, amid a series of increasingly harsh U.S. enforcement actions against banks that have for years not closely policed illicit money flows.

BNP is also expected to transfer some related efforts that supervise dollar-clearing operations to New York, one source said.

A BNP spokeswoman declined to comment. The bank's chief executive, Jean-Laurent Bonnafe, told shareholders in May that the bank had improved its control operations to avoid sanctions-related failures in the future, without providing specifics.

U.S. authorities are investigating whether the lender evaded U.S. sanctions relating primarily to Sudan, Iran and Syria between 2002 and 2009.   Continued...

An employee walks behind the logo of BNP Paribas in a company's building in Issy-les-Moulineaux, near Paris, June 2, 2014. REUTERS/Charles Platiau