BNP Paribas Revamps Compliance After Sanctions Violations Settlement
November 19 2019 - 6:32PM
Dow Jones News
By Mengqi Sun
Five years after agreeing to pay a record fine for sanctions
violations, BNP Paribas S.A. has made structural changes to its
compliance division -- an effort to strengthen the independence of
the bank's compliance function and improve ethical culture.
The efforts have included setting compliance as an independent
function that reports directly to the chief executive, as well as
moving part of the bank's head office for sanctions compliance --
the unit that sets the global sanctions compliance standards for
the bank -- to New York from Paris in 2014, according to Eric
Young, chief compliance officer for BNP Paribas Americas, who spoke
Tuesday at a panel hosted by The Wall Street Journal and Dow Jones
Risk & Compliance.
"Other banks are looking at our model because they see
benefits," Mr. Young said on the sidelines of the event, referring
to the move of the head office for sanctions compliance.
The French bank in 2014 agreed to enter a guilty plea and pay
nearly $9 billion to U.S. federal and state authorities for
violating the International Emergency Economic Powers Act and the
Trading with the Enemy Act. It was the first time a global bank had
agreed to plead guilty to violating U.S. economic sanctions.
The penalties included the largest-ever settlement -- more than
$963 million -- with U.S. Treasury Department's Office of Foreign
Assets Control, which enforces U.S. economic sanctions.
OFAC said that BNP Paribas allegedly processed thousands of
transactions to or through U.S. financial institutions that
involved countries, entities or individuals that are blacklisted by
the U.S. up to 2012. The sanctions programs involved Sudan, Iran
and Cuba, according to the settlement agreement published by OFAC
in 2014.
When Mr. Young joined BNP Paribas Americas in January 2015,
about six months after the agreement, the bank's compliance
function was decentralized and the company had begun
remediation.
"There was already a blueprint under way," he said. "But my job,
together with my colleagues globally, was to execute against
that."
That included separating the corporate compliance division from
the risk and legal departments, a change that allowed the
compliance team to manage an independent budget and gave them more
power over hiring and firing decisions in the compliance division,
as well as a say in compliance-related decisions that affect
bonuses, Mr. Young said during the panel.
The Americas compliance team now has about 500 people, he
said.
The company now also has chief conduct and control officers
within the business acting as the first line of defense, Mr. Young
said. These officers, who are separate arms within the business,
work with bankers, traders and salespeople in real time to manage
compliance risks.
Write to Mengqi Sun at mengqi.sun@wsj.com
(END) Dow Jones Newswires
November 19, 2019 18:17 ET (23:17 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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