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TexasTowelie

(110,972 posts)
Mon Jun 23, 2014, 11:51 PM Jun 2014

US to Fine BNP $8+ Billion, Suspend Access to Dollar Clearing

While it is refreshing to see the authorities man up a bit in dealing with a miscreant bank, it’s also critical to recognize that the US show of spine with BNP is all about the US tightening control over international payments. In other words, the harsh settlement is all about the US projecting its power overseas via financial services. It is not a precedent for how the authorities will deal with other types of bank abuses.

Key elements of the deal, as told by the Wall Street Journal:

BNP Paribas SA BNP.FR -1.92% and U.S. prosecutors have agreed to broad terms of a deal in which the bank would pay $8 billion to $9 billion and accept other punishment based on what investigators say is evidence the bank intentionally hid $30 billion of financial transactions that violated U.S. sanctions, according to people close to the probe.

The two sides in recent days reached a general outline of a deal that also would include a guilty plea to a criminal charge of conspiring to violate the International Emergency Economic Powers Act and a temporary ban—likely lasting a period of months—on the company’s ability to transact in U.S. dollars, according to several people familiar with the discussions.


This chart illustrates that these settlements don’t appear to have much logic:



Now one might contend that the Standard Chartered fine was proportionately worse because (as we wrote at the time) the bank was a defiant, recidivist breaker of anti-money-laundering rules, where records were doctored to fool regulators and in-house counsel blew off “cut it out” advice of outside counsel. One might also argue that the dollar amount of the fine doesn’t tell the whole story, since losing access to dollar clearing services will be very costly to BNP. It won’t just be the additional expense of having to conduct transactions through correspondent banks; BNP is also at risk of having clients that engage in a lot of dollar-related business picked off by competitors.

But notice how these are all foreign banks? Why don’t we contrast those fines with the slap on the wrist that Wachovia received in 2011? As we wrote then in Wachovia Paid Trivial Fine for Nearly $400 Billion of Drug Related Money Laundering:

More at http://www.nakedcapitalism.com/2014/06/us-fine-bnp-8-billion-suspend-dollar-clearing.html .
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