The French bank has earlier been accused of persistently violating US sanctions laws.
The New York state department of financial services, headed by Benjamin Lawsky, is near a deal with Paribas on the ban on currency conversions, known as dollar clearing, the people said. The bar would be the first of its kind for a global bank.
The temporary ban is expected to be limited to certain business lines related to the underlying transactions in question, and would span various geographic regions, one of the sources said on Wednesday. Business lines that have come under scrutiny include oil-trade financing. It won't be a death mallet, but it's a serious hit, the source said.
BNP clears hundreds of billions of dollars through New York every day, according to sources, serving customers in trade finance and commodities businesses, custodian accounts and foreign exchange.
Much business worldwide is done in dollars, and dollar clearing is a key banking activity. It is unclear when the ban would come into effect. It may be phased in, another source said on Wednesday.
It's also not clear if Paribas has found a workaround to soften the blow, such as identifying another bank to temporarily meet clients needs.
Lawskys office proposed the suspension as one condition for not revoking Paribas's license to operate in New York in light of the lengthy alleged
violations, Reuters reported last month. The bank is also expected to plead guilty to a federal criminal charge and pay nearly $9 billion as part of a larger settlement with multiple enforcement authorities that could be announced as early as next week, sources said.