June 27 (Bloomberg) -- BNP Paribas SA is set to plead guilty to criminal charges Monday in Manhattan federal court, a person familiar with the matter said, ending a wide-ranging probe that may bring the biggest-ever penalty for violations of U.S. sanctions against rogue nations.
The French bank has been in talks with state and federal authorities over a penalty that may reach a record $9 billion, another person familiar with the matter has said.
The investigation is being conducted by the Justice Department, U.S. Attorney Preet Bharara, Manhattan District Attorney Cyrus Vance Jr. and Benjamin Lawsky, superintendent of New York’s Department of Financial Services. It involves alleged violations of sanctions against Sudan, Iran and Cuba, mostly dating from 2002 to 2009, with some continuing until 2011, another person familiar with the matter has said.
BNP Paribas allegedly hid transactions of about $30 billion that violated sanctions, a person familiar with the settlement discussions said earlier this week. The Paris-based bank will probably plead guilty to conspiring to violate the International Emergency Economic Powers Act, the person said.
Cesaltine Gregorio, a spokeswoman for BNP Paribas, declined to comment on the matter.
The BNP Paribas settlement will be the latest and the biggest of billion dollar-plus bank accords this year, and it will be the second major European bank to plead guilty in 2014.
In May, Credit Suisse Group AG agreed to pay $2.6 billion, the largest penalty in an offshore tax case, after using secret Swiss accounts to help Americans hide money from the Internal Revenue Service. Its main banking unit pleaded guilty.
In a non-sanctions case, JPMorgan Chase & Co. agreed in January to pay $1.7 billion to settle U.S. claims that it facilitated imprisoned money manager Bernard Madoff’s Ponzi scheme, the largest in U.S. history.
New York-based JPMorgan, the biggest bank in the U.S. by assets, entered into a deferred-prosecution agreement with Bharara’s office, acknowledging oversight lapses related to an account Madoff used to fund his multi-billion-dollar fraud.
In 2012, HSBC Holdings Plc agreed to pay $1.9 billion to resolve allegations of laundering drug money from Mexico and sanctions-violations, while it avoided a guilty plea by admitting wrongdoing as part of its accord.
That had been the largest settlement for doing business with sanctioned countries. U.S. prosecutors argued that a more severe penalty against BNP Paribas was justified because the misconduct was more egregious and the bank didn’t fully cooperate with the investigation, a person with knowledge of the matter has said.
BNP Paribas is also close to an agreement with Lawsky, New York state’s top banking regulator, that would curtail some of its dollar-clearing operations for as long as a year, according to a person familiar with the matter.
Caitlin Ferrell, a spokeswoman for Lawsky’s office, declined to comment on the case.
The ban on dollar clearing could affect specific business lines, such as oil and gas transactions, and certain offices, such as Geneva, where the alleged illegal transactions took place, the person said.
Jim Margolin, a spokesman for Bharara, and Joan Vollero, a spokeswoman for Vance, declined to comment.
U.S. authorities first learned about possible wrongdoing by BNP Paribas around 2007, when an informant contacted the Manhattan District Attorney’s office. The bank conducted its own investigation and about a year later came forward with its own findings, people familiar with the matter have said.
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