Reuters/New York/Washington

 French bank BNP Paribas has pleaded guilty to two criminal charges and agreed to pay almost $9bn to resolve accusations that it had violated US sanctions against Sudan, Cuba and Iran, in a severe punishment aimed at sending a clear message to other financial institutions around the world.

The BNP Paribas guilty plea is the direct consequence of a broader US Justice Department shift in strategy that is expected to try to snare more major banks for possible money laundering or sanctions violations.

In an unprecedented move, regulators banned BNP for a year from conducting certain US dollar transactions, a critical part of the bank’s global business, in addition to the fine which was a record for violating American sanctions.

“Through a series of egregious schemes to evade detection and with the knowledge of multiple senior executives, BNP employees concealed more than $190bn in transactions between 2002 and 2012 for clients subject to US sanctions including Sudan, Iran and Cuba,” the New York State regulator said.

US authorities said the severe penalties reflected BNP’s drive to put profits first, even after US officials warned the bank of its obligation to crack down on illegal activity. Shares in BNP maintained early gains to be quoted 3.8% higher at 1345 GMT, making it the strongest performer in the European bank index because of relief the bank had finally settled the case.

The bank essentially functioned as the “central bank for the government of Sudan”, concealed its tracks and failed to cooperate when first contacted by law enforcement, US authorities said.

They also found BNP Paribas had evaded sanctions against entities in Iran and Cuba, in part by stripping information from wire transfers so they could pass through the US system without raising red flags.

With its Sudanese clients, the bank admitted it set up elaborate payment structures that routed transactions through satellite banks to disguise their origin.

“BNPP banked on never being held to account for its criminal support of countries and entities engaged in acts of terrorism and other atrocities, but that is exactly what we did today,” said Manhattan US Attorney Preet Bharara, whose office helped to prosecute the case. “We deeply regret the past misconduct that led to this settlement,” BNP’s Chief Executive Officer Jean-Laurent Bonnafe told analysts and investors on a conference call on Tuesday.   He said the bank would implement a significant strengthening of its internal controls and processes.

Credit Agricole and SocGen have disclosed that they are reviewing whether they violated US sanctions. SocGen said in its latest annual report that it is engaged in discussions with the Treasury Department’s Office of Foreign Assets Control over potential sanctions violations. The two banks could not be immediately reached for comment.

The settlement marks a stinging rebuke for BNP, the grand dame of French banking and one of the world’s five biggest banks by assets.

Until now BNP Paribas had managed to avoid the sort of scandals that damaged most of its rivals, including interest rate manipulation and the mis-sale of US sub-prime mortgages.

From BNP Paribas’ historic Parisian headquarters, where Napoleon married Josephine in 1796, BNP Paribas management has always prided itself on its tight risk controls which helped it successfully navigate the financial and eurozone debt crises. The Swiss financial regulator said it was investigating staff at BNP Paribas’ Swiss arm after the bank’s general counsel appeared in a New York court to plead guilty to one count of falsifying business records and one count of conspiracy.

France’s bank supervisor said that BNP Paribas could cope with the sanctions without risking its financial health, and  Finance Minister Michel Sapin said the bank “will still be able to finance economic activity” in France. But the stock is still down around 16% since mid-February because of the affair.

Concern about the future of France’s biggest listed bank and the knock-on effect on the fragile French economy prompted President Francois Hollande to express concern to Barack Obama and a French threat to derail US-EU trade talks.

A pipeline of cases has built up as US prosecutors have pivoted from focusing on specific criminals to also vigorously pursuing financial institutions that move money for them, which some had in the past considered “too big to jail”.

Leslie Caldwell, who leads the criminal division at Justice Department, said in an interview that a unit within the Justice Department has its sights set on a range of firms potentially involved in illicit money flows. The penalties imposed on BNP Paribas dwarf any previously handed out for sanctions avoidance and are far bigger than those against Credit Suisse in May, which became the largest bank in decades to plead guilty to a US criminal charge, for helping Americans to evade taxes.

No individuals were charged on Monday, but US authorities said they had not wrapped up their inquiry. “The case which BNP is pleading to now is against the Corp alone, but our investigation into potential individual culpability is continuing,” Manhattan District Attorney Cyrus Vance said.

BNP said it would take an exceptional charge of €5.8bn ($7.9bn) in the second quarter of this year. It plans to keep its dividend payment at €1.5 per share this year, the same as in 2013, and expects its core capital adequacy ratio to be around 10% at the end of June, consistent with long-term targets. The bank had been expected to cut its dividend, sell bonds or some assets to help pay for the fine.

“While the settlement is very significant it does not call into question the solidity of BNP Paribas,” Bonnafe said.

“We consider the settlement a setback for the group, but we do not expect its franchise to suffer lasting damage,” Fitch Ratings agency said.

A fine of up to $10bn and a dollar clearing ban had been widely expected, and analysts said keeping the dividend intact was positive.

“The size of the fine we knew, the reaction is more to do with BNP’s extremely reassuring comments and the efforts made to protect the dividend,” said Francois Chaulet, fund manager at Montsegur Finance in Paris.

BNP Paribas will have to suspend its dollar-clearing operations through its New York branch and other US affiliates during all of 2015 at the business lines where the misconduct took place, the US authorities said.

The ban could trigger a client exodus, and it is not clear how BNP may blunt its impact. It said it would clear the affected dollar-clearing operations through another bank, which it did not name. “We have not observed any massive uncertainty among clients,” said BNP Finance Director Lars Machenil.

Some of the business lines affected were dollar clearing on behalf of the oil and gas finance business from Geneva, Paris and Singapore, the trade finance business from Milan, and for oil and gas-related clients from Rome.

The ban was proposed as one condition for not revoking BNP’s license to operate in New York, which would have effectively been a death warrant, sources had previously told Reuters.