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

BNP pleads guilty for second time in $9 billion U.S. sanctions accord Wed, Jul 09 17:48 PM EDT image By Joseph Ax and Nate Raymond NEW YORK (Reuters) - BNP Paribas, for the second time in nine days, pleaded guilty on Wednesday to conspiring to violate U.S. sanctions, as part of a nearly $9 billion settlement in which the French bank admitted to breaking embargoes against Sudan, Cuba and Iran. Prosecutors had accused the bank of processing billions of dollars of transactions through the U.S. financial system on behalf of Sudanese and others barred from doing so because of their countries' human rights abuses, support for terrorists and other national security concerns. U.S. District Judge Lorna Schofield accepted the plea at a hearing in Manhattan federal court. The plea was entered by the bank's general counsel, Georges Dirani. BNP Paribas admitted to having conspired from 2004 to 2012 to violate the International Emergency Economic Powers Act and the Trading with the Enemy Act. The U.S. Justice Department unveiled the record settlement on July 1, when the bank pleaded guilty in New York state court to charges of falsifying business records and conspiracy brought by Manhattan District Attorney Cyrus Vance. (Reporting by Joseph Ax and Nate Raymond in New York; Additional reporting by Aruna Viswanatha in Washington; Editing by Chris Reese) ============================= Tue, Jun 24 18:53 PM EDT image 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. The bank's overall compliance team employed more than 1,500 staff in 40 countries at the end of 2013, mostly within Europe, the United States and Asia, according to the bank's 2013 annual financial report. It did not say how many staff were dedicated to its U.S. sanctions compliance operations. BNP is now trying to fill more than 200 jobs in the United States that have compliance responsibilities, a search of its website shows, including many for its California-based Bank of the West unit. One of the jobs includes a vice president position in New York for BNP Paribas to investigate accounts for anti-money laundering and other risks. Banks have been beefing up their compliance operations in response to the U.S. crackdown on violations. JPMorgan said in its annual shareholder letter in April that 8,000 of its employees will be dedicated to its anti-money-laundering operations. GLOBAL CRACKDOWN U.S. authorities have pursued top foreign banks over sanctions violations and have obtained hundreds of millions of dollars in settlements from Credit Suisse, Standard Chartered, and Barclays, among others. One source said BNP's New York sanctions compliance unit would have powers over every branch and subsidiary of the bank worldwide. Another source said locating the operation in New York was significant because it would offer more transparency to U.S. regulators. A years-long U.S. government investigation has turned up some $100 billion in transactions processed by BNP that may have had some information removed or otherwise disguised in order to evade filters on certain transactions with Sudan and elsewhere, Reuters reported earlier. Around $30 billion of the transfers specifically violated U.S. sanctions, one of the sources said. Part of the problem lay in the New York clearing operation relying on questionable information being provided by employees in Paris about the nature of the transactions, another source said. Representatives of the U.S. Federal Reserve and the New York state bank regulator, the Department of Financial Services, the U.S. Justice Department, the U.S. Treasury Department and the Manhattan District Attorney's office, which are involved in the investigation, declined comment. 'AHEAD OF THE THUNDERBOLT' The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) sanctions drug traffickers, terrorists, Iranian banks and others under more than 30 different programs, freezing their assets and prohibiting U.S. firms from doing business with them. It relies on the private sector to ensure the sanctions work in practice. The work is often painstakingly detailed, because there are often multiple variations of each name, with sometimes little other identifying information than a name and a country of residence. Large banks spend millions of dollars and hundreds of hours a year devising complex automated systems to scan the list and avoid false positives. BNP told U.S. regulators privately it would make the move weeks ago, a source said. "It was an effort to appease regulators. I think what they were trying to do was get ahead of the thunderbolt," another source said. The overall settlement between BNP and U.S. authorities, which is also expected to include BNP pleading guilty to a federal criminal charge, is still taking shape. Negotiators are working out details of a "statement of facts" and how long the bank will be suspended from clearing clients' dollar transactions. At least a dozen individuals also are expected to leave the bank as part of the deal, some of whom have already departed. (Additional reporting by Maya Mikolaeva in Paris and Anna Yukhananov in Washington) ======================================= Bell sues ex-councilman, foundation and construction firm over payouts Luis Artiga reacts after being acquitted in the Bell corruption trial in March 2013. He was the only one of eight former city officials to be exonerated on all counts. (Irfan Khan / Los Angeles Times) By Jeff Gottlieb contact the reporter This article is related to: Crime target of a Bell lawsuit is a construction firm paid $3.2 million without a contract or council approval in a lawsuit, seeks most of the yearly salary of former City Councilman Luis Artiga June 24, 2014, 7:45 PM Continuing efforts to recover money lost during the years of scandal, Bell has sued a former councilman, a steelworker foundation and a construction company for millions of dollars it says they received illegally when former City Manager Robert Rizzo ran the town.. The biggest target in the suit is McCullah Construction Co. of Bell Gardens, which was paid $3.2 million from 2005-10, most of it authorized by Rizzo without a contract or council approval. Timeline: 'Corruption on steroids' in Bell Timeline: 'Corruption on steroids' in BellOpen link > According to the lawsuit, emails show that in early 2009, McCullah also worked on Rizzo's Huntington Beach home. "The emails include statements about McCullah and Rizzo 'making up' payments as they go along and leaving the scope of work done at Rizzo's home blank," the lawsuit said. Steve Onstot, an attorney for Bell, said he was continuing to investigate whether the city in essence paid McCullah for the work on Rizzo's home. Asked about the allegations, Herb E. McCullah Jr., owner of the company, replied, "They can say anything they want." His attorney did not return a call seeking comment or respond to an email. lRelated Full coverage: Corruption in BellLocalFull coverage: Corruption in BellSee all relatedí Rizzo's attorney, James Spertus, has said his client paid for the home remodeling with his own money. The city also is suing former Councilman Luis Artiga for repayment of most of his yearly salary, and the National Steelworkers Oldtimers Foundation — which was run for years by then-Councilman George Cole — alleging excessive payments it received for transportation of the elderly. The suit says that Rizzo, Artiga and Cole violated state conflict-of-interest laws. L.A. Times neighborhoods: Bell Rizzo began his 12-year prison term last month after pleading no contest to 69 counts of corruption. Cole, along with four other former council members, pleaded no contest to two counts of misappropriating public funds as part of a deal with the district attorney. He faces a maximum of four years in state prison when he is sentenced July 23. Artiga, a minister, is the only one of the eight Bell officials charged with corruption who was acquitted. Randy Adams should be target number one, period. Anything short of his repaying every single penny is a travesty of justice and shows favoritism. The lawsuit says that Artiga was paid $191,651 during his 18 months on the council — $183,575 more than the legal limit. Council members were convicted of boosting their salaries by being paid for sitting on city boards that met seldom, if ever. "I didn't vote for [the council salaries], I didn't approve it," Artiga said. "It's not my fault. How could I have known?" The suit also alleges that Bell paid the National Steelworkers Oldtimers Foundation, based in Fontana, $87,120 it was not entitled to from 2006-08. The suit said Rizzo approved the payments, not the City Council, a violation of the city charter and government code. Bell trial verdicts The suit says that Cole, the foundation's chief executive, took part in the negotiations. Steve Madison, the group's lawyer, said that the payments were cost-of-living adjustments that were properly approved and that audits did not identify any problems. jeff.gottlieb@latimes.com Twitter: @gottliebjeff =============================================================