A report by Global Sanctions on 15 October 2025 highlighted that a U.S. court has allowed terrorism financing claims based on sanctions breaches against BNP Paribas to move forward, denying in part a motion to dismiss and sending the matter into discovery.
A major development in financial crime and compliance law has occurred in the litigation involving BNP Paribas. On 30 September 2025, the U.S. District Court for the Southern District of New York issued a ruling on a motion to dismiss in the case brought by victims of terrorist attacks, finding that plaintiffs have plausibly alleged claims under U.S. anti-terrorism statutes and sanctions law. The court denied the motion in part, allowing claims to proceed into discovery. That means financial crime risk, sanctions compliance failures, and allegations of aiding terrorism financing remain live and subject to further fact-finding. The litigation concerns allegations that the bank provided financial services to Iranian entities that acted as fronts for a designated terrorist organization, and that those services helped facilitate acts of terrorism in Iraq or Israel.

From a compliance perspective this is a critical moment. The litigation claims that the bank used its U.S. branch or U.S. dollar clearing channels to process transactions for Iranian oil and gas companies, helped strip identifying information, and ignored red flags despite warnings from U.S. regulators. The decision emphasizes that prior enforcement history and internal knowledge are relevant to assessing liability.

Regulatory enforcement and compliance context involving BNP Paribas

Financial institutions must comply with U.S. economic sanctions under statutory frameworks such as the International Emergency Economic Powers Act and the Trading with the Enemy Act. In 2014, BNP Paribas pleaded guilty to conspiring to violate those laws by processing billions of dollars of transactions through the the U.S. financial system on behalf of entities in Sudan, Iran, and Cuba that were subject to U.S. sanctions. As part of that plea, BNP Paribas agreed to pay a record fine of US$8.9 billion, the largest fine then imposed in a sanctions context, and also accepted probation and restrictions on certain U.S. dollar clearing activities. That enforcement history forms a foundation for regulatory scrutiny and civil claims.

The prior failure involved shortcomings in originator and beneficiary screening, insufficient due diligence, or inadequate record keeping for transactions involving sanctioned jurisdictions. Because the bank had prior admissions and regulatory findings, those facts may be used in civil litigation or by regulators as evidence of knowledge or willfulness in later proceedings.

Litigation reasoning and standards in the Moses v BNP Paribas case

The Moses et al. v. BNP Paribas S.A. case originated in June 2024 when hundreds of American victims and family members of victims of terrorist attacks in Iraq and Israel filed a civil complaint in the U.S. District Court for the Southern District of New York. The plaintiffs alleged that those attacks were carried out by Iran’s Islamic Revolutionary Guard Corps (IRGC) and its affiliated militias, which were financed through Iranian state-owned or front companies that relied on BNP Paribas for U.S.-dollar transactions. They argued that the bank’s historical misconduct—specifically, its use of U.S. clearing channels to process billions of dollars for sanctioned Iranian, Sudanese, and Cuban entities—enabled the IRGC to maintain access to hard currency used to fund terrorism.

The legal foundation of the complaint rests on the Justice Against Sponsors of Terrorism Act (JASTA), which expanded the Anti-Terrorism Act (18 U.S.C. § 2333) to cover entities that knowingly provide substantial assistance to terrorism. Under JASTA, a party can be held civilly liable for aiding and abetting terrorism if plaintiffs can show that the defendant was generally aware of its role in the wrongful conduct and provided significant help that contributed to the resulting harm. The plaintiffs claimed BNP Paribas not only knew that its clients were acting as Iranian fronts but also deliberately stripped identifying information from transactions routed through its New York branch to disguise their origin.

The court analyzed these allegations under established aiding-and-abetting principles, considering whether the bank’s services—such as trade finance, foreign exchange, and dollar clearing—constituted “substantial assistance” and whether the bank had sufficient knowledge of the terrorist connection. The judge found the plaintiffs’ claims plausible, citing prior regulatory findings and the bank’s 2014 $8.9 billion sanctions settlement as context showing awareness of sanctions obligations and risks. The court also ruled that jurisdiction in New York was proper because BNP Paribas maintained U.S. operations and cleared U.S.-dollar payments through the American financial system, providing a sufficient domestic nexus for liability.

As a result, the motion to dismiss was denied in part, allowing the plaintiffs to proceed to discovery, where they will seek evidence from BNP Paribas’ internal compliance files, audit records, and transaction logs related to Iranian clients. The decision signals that civil claims can survive early procedural challenges if plaintiffs can link historical sanctions violations to the financing of terrorist activities, marking a significant expansion of legal exposure for global financial institutions.

Practical AML / CFT lessons and risk management for compliance teams

For compliance professionals and AML/CFT specialists the ruling carries several practical lessons. First, prior enforcement or settlement does not shield an institution from civil suits: compliance failures from previous periods can be used as evidence of knowledge or willfulness. Compliance programs must not only comply with regulatory obligations but also anticipate civil litigation risk.

Second, this decision underscores the importance of full transparency in transaction flows, especially when dealing with jurisdictions subject to sanctions such as Iran. Stripping or deleting identifying originator or beneficiary data is a red flag, and AML transaction monitoring systems should detect missing or altered originator/beneficiary fields. Enhanced due diligence should include tracing through U.S. dollar clearing chains or correspondent banking links, particularly for sectors like oil and gas or trade finance in sanctioned jurisdictions.

Third, compliance functions should periodically review trade finance, commodity finance, or intra-group transactions involving sanctioned jurisdictions or state-affiliated enterprises. Entities acting as fronts or shell companies may appear legitimate but may be controlled by designated terrorist organizations. Beneficial ownership checks, screening of related or affiliate parties, and document authenticity (trade documents, shipping manifests, contracts) should be enforced robustly.

Fourth, for litigation risk institutions should preserve audit trails, screening logs, suspicious activity reports, internal compliance memos and escalations. In future civil proceedings, plaintiffs may request documents showing internal compliance decisions, red flag escalations, and communications with regulators. Document retention and compliance governance become critical.

Fifth, banks or financial institutions with U.S. presence or access to U.S. dollar clearing face dual risk: regulatory enforcement and civil liability. That means even non-U.S. banks that use U.S. correspondent or clearing systems may be pulled into litigation, as U.S. courts can assert jurisdiction based on links to the U.S. financial system.

Implications for policy, industry, and compliance frameworks

The renewed litigation and enforcement context in the case of BNP Paribas may influence regulatory expectations and industry practice. Civil litigation may become a stronger complement to regulatory enforcement, increasing incentives for institutions to strengthen compliance controls beyond minimal regulatory compliance.

Compliance policies may be revised to reflect scenario risk for terrorist financing via front companies or sanctioned jurisdictions. AML / CFT programs may need enhanced trade finance controls, better beneficial ownership screening, and stricter due diligence for customers connected to high risk sectors or sanctioned regimes. Training for compliance staff should emphasise that even previously settled issues do not remove civil exposure.

From a policy perspective, civil suits like this may create new legal precedents about how aiding and abetting claims interact with prior sanctions violations. That can broaden the scope of liability for banks and increase the cost of non-compliance. Regulators may update guidelines or issue new expectations for compliance programs, especially for correspondent banking, trade finance, or dollar clearing.

For global compliance teams, particularly outside the U.S., the case illustrates how U.S. statutory frameworks can reach foreign institutions via U.S. dollar clearing or U.S. branches. That means compliance controls must align with U.S. sanctions law if there is exposure to U.S. channels.

Final reflections and actionable advice for AML specialists

The ruling is a wake up call for compliance teams. It highlights that civil litigation can survive at the motion to dismiss stage if allegations are sufficiently detailed including prior enforcement history, stripping of identifiers, use of U.S. dollar clearing, or front companies in sanctioned jurisdictions. AML / CFT specialists should conduct retrospective reviews of past transactions with sanctioned counterparts especially in high-risk sectors like energy or oil and gas, ensure originator / beneficiary data completeness, validate trade documents and shipping manifests, and maintain robust audit trails and escalation memos.

Institutions should model exposure not only to regulatory penalties but also to potential civil claims by victims of terrorism financing. Compliance stress tests should include scenarios of civil liability, not only regulatory fines. Monitoring and training should be updated to reflect that even previously settled enforcement matters can be used in future litigation.

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Related Links

• U.S. Department of Justice press release on BNP Paribas plea and fine
• U.S. statute text for JASTA
• U.S. statute text for International Emergency Economic Powers Act
• U.S. statute text for Trading with the Enemy Act
• U.S. court opinion in Moses v BNP Paribas

Other FinCrime Central Articles About the Need for Better Sanction Management and Transaction Monitoring

• Summer Series #23: The High-Stakes Required Evolution Of Sanctions Screening Controls
• Global Headache: How Politically Motivated Sanctions Disrupt Compliance Worldwide
• Why Banks Struggle to Integrate Trade Finance Data into Transaction Monitoring Systems

Source: Global Sanctions

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.

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