Author: Azizur Rahman
7 June 2021
5 min read
Rahman Ravelli assesses the bank’s indictment and its options under French law.
On May 11, 2021, the French bank BNP Paribas SA was indicted on counts of “laundering of corruption and of embezzlement of public funds” in relation to the ongoing judicial investigation into assets in France owned by the family of the deceased former Gabon President, Omar Bongo.
It is the first time that a bank has been indicted on a laundering offence related to the decade-long investigation into so-called “ill-gotten assets” acquired in France by foreign public officials. The investigation has also targeted the estate of current Congo President Denis Sassou-Nguesso and his relatives.
According to publicly available information, the bank failed to comply with its reporting duties, as it never issued any declaration of suspicion to TRACFIN - the intelligence service of the French Ministry of Economy and Finance, specialising in combating illegal financial channels - between 2002 and 2009. This was despite the unusual activities involving a bank account opened with it by the company Atelier 74, a company specialising in interior design that has quasi-exclusive connections to the Bongo family and was tasked with finding and renovating real estate worth millions of euros.
Investigations have led to allegations that €52 million moved between the Gabonese subsidiary of Atelier 74 and its French parent company between 1997 and 2009, enabling the Bongo family to acquire real estate in Paris and Nice worth approximately €32 million. Investigations further point to the “preponderant” role played by BNP Paribas in the laundering scheme and to major deficiencies in the bank’s oversight of financial transactions involving a politically exposed person (PEP).
France’s legislative framework for fighting money laundering and terrorism financing relies on banks, insurance companies, notaries, chartered accountants, lawyers and other professionals meeting their obligations, under the French Monetary and Financial Code, to report their suspicions to TRACFIN.1
As it is particularly exposed to the risk of money laundering and terrorism financing, the banking sector is subject to stringent obligations aimed at preventing and detecting such a risk. Banks are required to be especially vigilant regarding their clientele and the ultimate beneficiaries of financial transactions. (e.g., when involving PEPs).2 Furthermore, banks must report any amounts registered on their books that they know – or have reasons to believe – are the proceeds of a criminal offence or are linked to terrorism financing. 3
BNP Paribas seems to be having difficulties implementing a robust system to comply with its duty to report suspicions of potential criminal offences to TRACFIN. On May 30, 2017, the French regulator supervising banks’ and insurance companies’ activities, the Autorité de Contrôle Prudentiel et de Résolution (ACPR), fined BNP Paribas €10 million fine, lambasting the bank’s deficiencies when it came to organising a proper reporting system to comply with its duties regarding money laundering and terrorism financing.4More recently, BNP Paribas’ insurance subsidiary CARDIF was given a €2.5 million fine on similar counts, including deficiencies in its reporting obligations to TRACFIN.5
In France, being formally indicted with a criminal offence during a judicial investigation carries significant procedural implications.
Only suspects (whether individuals or legal entities) against whom there are “serious or consistent” indicators that they committed or participated in an offence can be indicted by the investigating judge.6 Suspects then become party to the judicial investigation and are therefore granted defence rights and additional prerogatives. In particular, indicted suspects can access the investigation case and file motions for the investigating judge to perform certain acts, such as interrogation, confrontation, motion to appoint an expert or motion to dismiss.
Although such an indictment carries a significant impact - including a heavy reputational one - it will enable BNP Paribas to have a better view of the state of the investigation into it. Having full access to the investigation case file means the bank can actively build its defence.
Upon completion of the judicial investigation, the investigating judge may decide to refer indicted suspects to criminal courts to stand trial.7 If this were to be the case for BNP Paribas, the bank would face severe sanctions. Laundering of criminal proceeds can be punished by up to five years in prison and a criminal fine of up to €375,0008 for individuals – increased to €1,875,000 for legal entities9. There can also be ancillary penalties,10 such as dissolution, prohibition to perform certain commercial activities, prohibition to trade assets on financial markets, confiscation of the proceeds of the offence11, and full or part confiscation of assets.12 Moreover, fines incurred for laundering can be increased to half (for individuals) and 2.5 times (for legal entities) the proceeds derived from the offence.13 Sanctions can also be increased and adapted when the underlying offence from which laundered funds derive is punished more severely.14
To date, there have been at least 13 people indicted in connection with the judicial investigation into the alleged “ill-gotten assets”. These include five members of the Nguesso family as well as Omar Bongo’s former Parisian attorney, Jean-François Meyer. No members of the Bongo family have been indicted so far.
The indictment of BNP Paribas can be seen as a one-of-a-kind procedural landmark in the investigation that began after a criminal complaint was filed in 2010 by Transparency International.
Financial institutions have, as yet, not faced prosecution. Another major French bank, Société Générale SA, had faced questioning in connection with the investigation into the estate of Equatorial Guinea’s vice president, Teodorin Nguema Obiang. Obiang was sanctioned on appeal with a three-year suspended jail sentence and a €30 million criminal fine for laundering of misuse of corporate assets, of embezzlement of public funds and of breach of trust. 15But Société Générale avoided trial.
With the introduction of deferred prosecution agreements into French criminal law in 201616, BNP Paribas may be eligible to enter into a convention judiciaire d’intérêt public (CJIP). Under such an agreement, the bank could avoid conviction and close the judicial investigation by paying a so-called “public interest fine” of up to 30% of its average turnover.17 However, BNP Paribas would only be eligible to conclude a CJIP only for the laundering of the proceeds of corruption. This is because at present the law, as currently drafted, does not enable DPAs to be entered into for laundering embezzled public funds.
When DPAs were first introduced, the Sapin II Law then required legal entities to acknowledge the legal charges pending against them before agreeing to a DPA concluded during a judicial investigation. This prerequisite was recently abandoned18, thus increasing DPAs’ attractiveness during judicial investigations.
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.