BNP Paribas Admits Guilt and Agrees to Pay $8.9 Billion Fine to U.S.

Updated, 9:07 p.m. | After months of heated negotiations, state and federal authorities on Monday announced a criminal case against BNP Paribas, taking aim at France’s biggest bank for transferring billions of dollars on behalf of Sudan and other countries blacklisted by the United States.

BNP agreed to plead guilty to criminal charges and pay an $8.9 billion penalty, a record sum for a bank accused of doing business with countries that face United States sanctions. State and federal authorities portrayed BNP, the seventh bank to settle a criminal sanctions violation case but the first to plead guilty, as the worst offender.

Like other banks, BNP hid the names of Sudanese and Iranian clients when sending transactions through its New York operations and the broader American financial system. But the wrongdoing was more pervasive at BNP, the authorities found, stretching from at least 2002 into 2012, by which time the investigation was already in full swing.

“This conspiracy was known and condoned at the highest levels of BNP,” Edward Starishevsky, an assistant district attorney in Manhattan, said in court on Monday when the bank pleaded guilty to one count of falsifying business records and one count of conspiracy.

The rebuke — from the Justice Department’s criminal division in Washington, the United States attorney’s office and district attorney’s office in Manhattan, as well as the Federal Reserve, Treasury Department and New York’s financial regulator, Benjamin M. Lawsky — provides a template for prosecuting other financial misdeeds. In the coming months, the focus will shift to a number of big banks suspected of manipulating foreign currencies.

In the BNP case, the authorities sought to send a message that no bank is immune from criminal charges, despite lingering concerns that financial institutions have grown so large and interconnected that they are “too big to jail.” The decision to require BNP’s parent company to plead guilty, coming six weeks after Credit Suisse pleaded guilty to helping American clients evade taxes, reflects a broader policy shift after decades of civil settlements and so-called deferred prosecution agreements.

“This outcome should send a strong message to any institution — any institution anywhere in the world — that does business in the United States: that illegal conduct will simply not be tolerated,” United States Attorney General Eric H. Holder Jr. said at a news conference on Monday.

Preet Bharara, the United States attorney in Manhattan who accused BNP of “perpetrating what was truly a tour de fraud,” has argued that no bank is too big to charge.

Still, criminal pleas could prompt regulators to revoke the license of a bank, the Wall Street equivalent of the death penalty. To prevent that outcome, prosecutors and regulators coordinated their actions months in advance.

Unlike Credit Suisse, which paid fines but faced few practical implications from pleading guilty, BNP was required to temporarily forfeit a core business operation in New York.

Mr. Lawsky announced on Monday that he would suspend its ability to process payments in dollar denominations, a function known as dollar clearing, which is essential to doing business with international clients. The deal with BNP will prevent certain units within the bank’s headquarters in Paris, as well as its offices in Geneva, Rome, Milan and Singapore, from clearing dollar transactions for one year beginning in January 2015.

Mr. Lawsky also required the bank to part ways with 13 employees, including one of its chief operating officers. “It is important to remember that banks do not commit misconduct — bankers do,” he said in a statement.

Still, not one BNP employee was criminally charged. And prosecutors have yet to demonstrate that their newfound enforcement muscle applies equally to American banks.

“Though we appreciate the magnitude of the BNP guilty plea, we believe this does not signify the end of ‘too big to jail,’ ” Public Citizen, a nonprofit watchdog group, said in a statement.

In its own statement, BNP emphasized that it had “designed new robust compliance” measures to prevent a repeat of the wrongdoing. “We deeply regret the past misconduct that led to this settlement,” said the bank’s chief executive, Jean-Laurent Bonnafé.

BNP had initially hoped to fend off a guilty plea. It had proposed creating an entirely new subsidiary to plead guilty, according to people briefed on the matter.

When prosecutors rebuffed that idea, the bank enlisted help in the highest rungs of French government. President François Hollande made unusually direct and personal appeals to President Obama, while French financial officials questioned Mr. Lawsky about the dollar-clearing suspension.

Ultimately, Mr. Lawsky focused the suspension on the specific units that processed transactions at the heart of the case, a move that will most likely generate a logistical headache for the bank and undercut its revenue as it has to outsource the business to another bank. The bank’s oil and gas units in Paris and elsewhere, for example, are subject to the suspension.

Some units tried to cover up the transactions, the authorities said. In the bank’s Geneva office, “there was policy to strip, amend and omit” information identifying Sudanese clients.

At the time, Sudan was operating a genocidal regime. And as Mr. Holder noted, citing the words of a BNP compliance manager, the country “hosted Osama bin Laden.”

Some BNP employees sounded the alarms. But at a September 2005 meeting, one of the bank’s chief operating officers “dismissed the concerns of the compliance officials,” Mr. Lawsky said, and requested that no minutes of the meeting be taken.

The bank’s compliance staff in New York also failed to thwart the wrongdoing, the authorities said. When another bank settled a sanctions violations case, BNP’s head of ethics for North America wrote in an email to a colleague, “The dirty little secret isn’t so secret anymore, oui?”

William Alden and Theodore Schleifer contributed reporting.