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FINE

French bank ‘ignored US warnings’ over embargo

French bank BNP Paribas was warned several times to stop violating US sanctions in countries like Iran, but it didn't and now faces a €7 billion fine, according to a report from French daily Le Monde.

French bank 'ignored US warnings' over embargo
French bank BNP reportedly ignored warnings from US authorities, a new report claimed on Friday. Photo: Dierk Schaefer/Flickr

French banking giant BNP Paribas, under threat of a mega-fine from US regulators, was warned repeatedly that transactions it was conducting ran the risk of violating US sanctions, the daily Le Monde said Friday.

"From 2006 … BNP Paribas received several warnings against such transactions from the United States and large US law firms," the French newspaper said without citing its sources.

BNP Paribas is in talks with US regulators to settle the dispute, with some US media saying the fine could exceed €7.4 billion euros and that the French bank could also temporarily lose its US banking licence.

The bank is accused of breaking sanctions against Iran, Sudan and Cuba between 2002 and 2009 by carrying out dollar transactions with them.

Le Monde said a US Treasury official visited BNP Paribas' headquarters in September 2006 to warn its executives in a closed door meeting against dealings with Iran.

"The warning was clear," said Le Monde, that the bank should act with the greatest possible caution regarding the transactions.

BNP Paribas hired three US law firms to evaluate US laws, which had changed in the mid-2000s, to consider all transactions conducted in dollars to be subject to US sanctions, even if conducted outside of the United States.

Le Monde wrote that in 2006 they warned BNP Paribas of the risks it faced from the transactions. BNP Paribas did not have an immediate comment on the report.    

French officials have defended the bank, warning that "disproportionate" penalties could upset talks on a vast free-trade pact between the 28-member European Union and United States.

President Francois Hollande has raised the matter several times with US President Barack Obama, most recently over a dinner in Paris last week — even though Obama has made clear he cannot intervene in a judicial process.

France argued that the stakes are high also for the international financial system, bank lending and economic recovery in Europe and the knock-on effects of such penalties — which could also be applied to other banks under investigation — would be widespread.

The governor of the Bank of France, Christian Noyer, has said that the bank did nothing wrong as it did not violate EU or United Nations rules in place at the time.

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BANKING

US hits French banking giant BNP with $246 million fine

US regulators have fined French banking giant BNP Paribas $246 million for the bad behaviour of its traders.

US hits French banking giant BNP with $246 million fine
Photo: AFP

US regulators on Monday fined French banking giant BNP Paribas $246 million for poor oversight of its foreign exchange traders who manipulated trading prices.

The move came six months after the Federal Reserve permanently barred former BNP trader Jason Katz from the banking industry, for manipulating foreign exchange prices.

“The firm failed to detect and address that its traders used electronic chatrooms to communicate with competitors about their trading positions,” the Fed said in a statement.

“The Board's order requires BNP Paribas to improve its senior management oversight and controls relating to the firm's FX trading,” the statement said.

BNP said the misconduct occurred between 2007 and 2013 the company has taken steps to strengthen oversight.

“BNP Paribas deeply regrets the past misconduct which was a clear breach of the high standards on which the Group operates,” the company said in a statement.

The Fed also blocked BNP from ever re-hiring any of the former employees involved the incidents, the central bank said.

New York State's Department of Financial Services in May fined BNP $350 million for the same case, accusing traders of “collusive activity” to manipulate currency prices.

The fine also follows the Fed decision in April to fine Germany's Deutsche Bank more than $150 million for similar “unsafe and unsound” foreign exchange trading practices.