The US Bank That Made BNP’s Epic Money-Laundering Possible Is…

Today’s undisputed winner of the prestigous award for best use of the word “unwittingly” in the headline of an article about money-laundering goes to Bloomberg, for their brilliant


Because when you help a foreign bank violate U.S. sanctions as French bank BNP did when it hid billions of dollars in transactions involving Sudan and Cuba and yet you somehow completely slip through the fingers of the US Department of Justice (sic), it can only be “unwittingly.”

Recall that “BNP Paribas, France’s largest bank, agreed June 30 to plead guilty to processing almost $9 billion in banned transactions involving Sudan, Iran and Cuba from 2004 to 2012. The company, which will pay a record $8.97 billion in penalties, will also be temporarily barred from handling some U.S. dollar transactions.” But certainly not all.

But how did JPM end up in the, yes yes unwitting, position of helping the biggest money laundering operation since HSBC decided to fund terrorist organizations around the world?

BNP Paribas turned to JPMorgan on the basis of legal advice from Cleary Gottlieb Steen & Hamilton LLP, said two people who asked not be named because the identities of the bank and the law firm haven’t been disclosed. The Paris-based lender relied on a legal memo that suggested using a U.S. bank might protect it from sanctions penalties, according to the statement of facts filed by prosecutors in New York.

Wait, so the name of JPM in the complaint hasn’t been revealed. Supposedly this is because of JPM’s “unwitting” innocence, as it would be uncouth to soil JPM’s fair name by appearing in a lawsuit whose main role is to punish France for opposing the US and delivering an amphibious assault ship to Russia.

JPMorgan is referred to as “U.S. Bank 1” while Cleary Gottlieb is identified as “U.S. Law Firm 1” in the court filings, the people said. Cleary Gottlieb later said such transactions may be illegal. Neither JPMorgan nor Cleary Gottlieb are accused of wrongdoing.

But wait, what if one actually, gasp, connects the dots as Bloomberg appears to have done:

In 2011, JPMorgan paid $88.3 million to settle an unrelated civil probe into transactions involving Cuba, Iran and Sudan. Investigators at the Treasury Department cited incidents in which JPMorgan managers and supervisors “recklessly failed to exercise a minimal degree of caution or care” in their sanctions obligations. The bank said at the time that none of the alleged violations was intentional.

In other words, the bank wired money to Cuba, Iran and Sudan accidentally. But… it doesn’t read so accidental to us:

BNP Paribas used a network of non-U.S. banks, including at least nine Arab banks, to disguise U.S. dollar transactions, according to court papers. “To the U.S. bank, it appeared that the transaction was coming from the satellite bank rather than a Sudanese bank,” according to the statement of facts filed in court, which BNP Paribas admitted to as part of its settlement.


BNP Paribas would transfer funds from a Sudanese bank to an account maintained by one of the satellite banks, according to the filing. The satellite bank would then transfer the money to the beneficiary by submitting the funds through JPMorgan without any mention of Sudan, according to the statement of facts, which identified the bank only as “U.S. Bank 1.”

But… that doesn’t sound unwitting to us. Not unwitting at all. Actually, it gets even worse:

The plan to use JPMorgan was put together by BNP Paribas executives in Paris and Geneva in the fall of 2004 after transactions involving overseas clients caught the attention of U.S. and state regulators, according to the statement of facts. BNP Paribas signed documents with the regulators in September of that year promising to improve its compliance systems.


Shortly thereafter, senior BNP Paribas executives met in Geneva to discuss how “embargoes against sensitive countries,” specifically Sudan, Libya and Syria, would affect the bank’s business, according to the statement of facts. They discussed using an unaffiliated U.S. bank to process payments involving countries subject to U.S. sanctions, the document states. Until then such transactions were being handled by BNP Paribas’s New York branch.


Following that meeting, BNP Paribas employees in Geneva were instructed to have U.S. dollar payments involving sanctioned entities cleared through “U.S. Bank 1” instead of BNP Paribas’s New York unit. “From 2004 through 2007, the vast majority of BNPP Geneva’s transactions involving Sudanese Sanctioned Entities were cleared through U.S. Bank 1 using a payment method that concealed from U.S. Bank 1 the involvement of Sanctioned Entities in the transactions,” according to the document.

Oh yes, because JPM did 3 years worth of billion dollar transactions without having a clue who was on the other end.  Well, the did one time:

In February 2006, JPMorgan rejected a transaction submitted on behalf of a Cuban credit facility after “back office employees had inadvertently made reference to Cuban entities,” the document states. Two other payments were also blocked by BNP Paribas’s New York branch. BNP Paribas resubmitted all three transactions after eliminating the references to the Cuban entity, according to the document.

And after any reference to Cuba was quietly stripped, all continued as per normal, with JPM wittingly not asking a single question where all this money is coming from, and certainly where it is going.

So in conclusion, it was “BNPP’s handling of these blocked payments was indicative of the bank’s cavalier — and criminal — approach to compliance with U.S. sanctions laws and regulations,” according to the statement of facts.

It definitely was not JPM’s “cavalier – and criminal – approach” for being the bank that enabled BNP’s money laundering in the US in the first place, something which resulted in a whopping $88.3 million fee charged to Jamie Dimon’s Congressional lobbying account. That was clearly unintentional. Because when transacting billions from two offshore accounts and never even pretending to care where the money comes from and goes to, as the US implies by not charging JPM as well, it can only be “unwitting.”

End result, for the same violation:

  • JPM paid a settlement of $88.3 million and neither admitted nor denied anything
  • BNP has so far paid a penalty of $8.97 billion and numerous people have lost their jobs (even if again nobody is going to prison, as they may sing and who knows which president, premier, congressman, minister, managing director or central banker will be named…)

Thus, new normal justice (sic).

via Zero Hedge Tyler Durden

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