The guilty plea by BNP Paribas for violating US sanctions is part of a larger Justice Department shift in strategy that is expected to snare more major banks.
The Justice Department and other US authorities were probing France’s Credit Agricole and Société Générale for potentially violating US economic sanctions against Iran, Cuba and Sudan, a source said.
The two French banks have in the past disclosed they were reviewing whether they violated US sanctions. They could not be reached for comment.
Another source said the Justice Department’s bank integrity unit was deep into a probe of whether Citigroup’s Banamex operation in Mexico failed to police money transfers across the US-Mexico border. Citigroup declined to comment.
Prosecutors had also investigated potential sanctions breaches at Deutsche Bank, according to people familiar with the probe, though it is unclear how far the investigation has progressed.
The biggest German bank said in its previous annual report that it had received requests for information from regulatory agencies and was co-operating with them. It did not immediately respond to a request for comment.
The pipeline of cases has built up as US prosecutors have pivoted from focusing on specific criminals to also pursuing the financial institutions that move money for them.
At the heart of this effort is the money laundering and bank integrity unit in the Justice Department. It handled the BNP Paribas probe, as well as money laundering and sanctions cases in recent years against HSBC Holdings and ING Bank.
Leslie Caldwell, who leads the criminal division at the Justice Department, said the unit had its sights set on a range of firms potentially involved in illicit money flows.
Historically, prosecutors used money laundering laws to go after low-level money mules, said Caldwell, referring to lower-level employees and others who did not play critical roles in instigating or allowing money laundering.
About five years ago the Justice Department decided to switch tactics and to more aggressively exploit the Bank Secrecy Act, which dates back to the 1970s and was expanded to include criminal penalties after September 11, 2001.
The law, which requires financial institutions to have robust anti-money laundering programmes, was little used for criminal prosecutions until the money laundering and bank integrity unit – with just 12 prosecutors – was created in 2010 to focus on enforcing it.
“This is a way to attack that problem in a much bigger and more effective way,” said Caldwell. “The old school way of attacking money laundering… really did not get at the problem, which was that many banks did not have adequate controls in place to prevent those transactions from happening.” – Reuters