BNP Paribas Reportedly Faces $5 Billion Fine For Allegedly Breaking Sanctions

Stephen Little

21 May 2014

BNP Paribas could be fined a record $5 billion by US authorities for allegedly breaking trade sanctions, becoming the second major European bank in a week to be hit by legal issues in the US, reports Bloomberg.

Federal and state legislators are currently investigating the French bank for the alleged violation of trade sanctions with countries such as Iran and Sudan.

According to the news service, regulators are seeking far more than had previously been rumoured and the settlement is set to exceed the $2.8 million Credit Suisse announced earlier this week after pleading guilty to helping US citizens evade taxes

Regulators are also trying to get a guilty plea from BNP Paribas and a settlement is expected next month, the news service said.

The share price of the Paris-listed banking group was down around 1.5 per cent late this afternoon at around €50.9 per share; at one stage it had fallen by over 3 per cent.

BNP Paribas declined to comment when contacted by this publication.

Last month, BNP Paribas revealed it might be hit with a US fine that is "far in excess" of the $1.1 billion provision it set aside last year to cover litigation costs linked to potential breaches of US sanctions.

As far as issues over sanctions are concerned, other banks such as Standard Chartered and HSBC have also been hit.

Credit Suisse

Credit Suisse’s parent company pleaded guilty yesterday to criminal charges that it helped Americans evade taxes, the first major global bank in the US to do so in more than two decades.

In 2009 UBS has agreed to settle criminal and civil charges for aiding wealthy Americans over tax evasion; it paid $780 million to settle civil charges, an event that also involved passing some client data to the US authorities. More recently, Wegelin, Switzerland’s oldest bank , had to cease operating in the US, and its Swiss business became folded into a new structure, after charges were brought against it for aiding tax evaders.

While Credit Suisse has paid a heavy fine, it has avoided the humiliation of losing bank licences, a fact that analysts said was a cause of relief. Credit Suisse's share price actually rose yesterday.