BNP Paribas' guilty plea and agreement to pay a record fine of nearly US$9 billion for violating US sanctions is part of a larger US Justice Department shift in strategy that is expected to snare more major banks and other firms across the financial food chain.
Two other major French banks, Credit Agricole and Societe Generale, Germany's Deutsche Bank, and Citigroup's Banamex unit in Mexico are among those being investigated for possible money laundering or sanctions violations, according to people familiar with the matter and public disclosures.
After months of negotiations, BNP agreed to the huge US$8.9 billion fine on Monday and admitted violating US trade sanctions by processing billions of dollars in illegal transactions on behalf of clients in Sudan, Cuba and Iran. The United States imposed the sanctions on the countries to block their participation in the global financial system.
It is the largest sanctions case brought by the Justice Department and the largest penalty in any criminal case involving a bank. Prosecutors say the penalty was necessary not only because of the sheer volume of the illicit transactions but also because of the bank's efforts to hide them and executives' lack of co-operation with the Justice Department.
"Sanctions are a key tool in protecting US national security interests, but they only work if they are strictly enforced," Attorney General Eric Holder said. "If sanctions are to have teeth, violations must be strictly punished."
The restrictions on dealings with sanctioned countries generally apply to US banks and foreign banks with US operations.
The Justice Department and other US authorities, including the Manhattan District Attorney, are now probing Credit Agricole and Societe Generale for potentially violating sanctions imposed against the same three nations with whom BNP did business - Iran, Cuba and Sudan - a source familiar with the investigations said.
Credit Agricole and Societe Generale have disclosed that they are reviewing whether they violated US sanctions. Societe Generale said in its latest annual report that it is engaged in discussions with the US Treasury Department's Office of Foreign Assets Control over potential sanctions violations.
Another source said the Justice Department's bank integrity unit is deep into a probe of whether Citigroup's Banamex operation failed to police money transfers across the US-Mexico border. Citigroup has said it is co-operating with the inquiry, which also involves the Federal Deposit Insurance Corporation.
Separately, Citigroup is investigating an alleged fraud involving US$565 million in loans at Banamex and as a result of that has fired a dozen employees.
Prosecutors have also investigated potential sanctions breaches at Deutsche Bank, according to people familiar with the probe, though it is unclear how far that has progressed. The bank said in its last annual report that it had received requests for information from regulatory agencies and is co-operating with them.
The timing of any possible legal action or related settlement negotiations is unclear.
The pipeline of cases has built up as US prosecutors have pivoted from focusing on specific criminals to also vigorously pursuing the financial institutions that move money for them.
Leslie Caldwell, who leads the criminal division at the Justice Department, said the department has its sights set on a range of firms potentially involved in illicit money flows, but she declined to name specific companies or confirm any particular investigations.
Additional reporting by Associated Press