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blueflyer
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DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 5:01 am

France's BNP Paribas is accused of violating US laws against transacting with embargoed countries such as Iran or Sudan for a period of 7 years. The transactions didn't directly involve its US subsidiary but they took place in dollars, so US law does apply. The bank, the DOJ and New York's Department of Financial Services have been negotiating a settlement for several weeks, and while there is no agreement on the fine, in the neighborhood of $10 billions, the biggest issue is the Department of Financial Services' push for a temporary license suspension, a sanction the bank is rejecting outright. The French ministry of finance has recently gotten involved.

http://www.nasdaq.com/article/justic...m-bnp-paribasupdate-20140529-00907
http://www.lemonde.fr/ameriques/arti...os-a-bnp-paribas_4428961_3222.html

Personally, I don't have any stake in BNP's future and I couldn't care less whether the fine is $1 billion or $100 billions. What I find outrageous is that once again, our financial regulators have no problem going for blood against a foreign bank, this time because they picked the wrong currency (the transactions were otherwise legal). When it comes to American banks, on the other hand, the ones who hire them to cushy jobs after a few years in government and donate to political campaigns, they are completely emasculated, handing out nothing but slaps on the wrist. When was the last time an American bank had to pay a fine equivalent to one year's worth of profit or 10% of its equity?
 
ltbewr
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 11:02 am

Let's face it, the USA banks pay a lot of bribes...um campaign contributiions...to American politicans so reducing the enforcement on American banks as strongly. That means foreign banks who can't buy our politicians (legally) are easier targets.
 
AA7295
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 11:08 am

Can you think for maybe one second.. that maybe... potentially... that they broke the law. And that it's not about charging them for using USD. It's about charging them for breaking a law for 7 years.

This isn't Mom and Dad's bank in Boise, Idaho. This is an international bank that has more than enough resources to pay for proper legal representatives to do the proper checks to ensure they are in legal compliance. They failed to do this and potentially (until charged) broke the law.
 
JJJ
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 11:16 am

Quoting aa7295 (Reply 2):
Can you think for maybe one second.. that maybe... potentially... that they broke the law

They did not break any French or local (Iranian or Sudanese) law.

Their US subsidiary did not break any US law either.
 
AA7295
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 11:32 am

Quoting JJJ (Reply 3):
They did not break any French or local (Iranian or Sudanese) law.

Their US subsidiary did not break any US law either.

If America mandates that USD transactions cannot be used for anything relating to Iran, Sudan or wherever and mandates the scope to be any USD transaction, then they broke the law.

Again, not a small bank. They may do best to hire more effective and knowledgeable lawyers.
 
rfields5421
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 12:34 pm

Quoting blueflyer (Thread starter):
When was the last time an American bank had to pay a fine equivalent to one year's worth of profit or 10% of its equity?

I don't know if it meets your criteria, but in 2013 - JPMorgan Chase paid $20 billion in fines and settlements for several cases, ranging from part of the Bernie Maddoff scandal to $13 billion over mortgage lending practices.

They have set aside another $28 billion for the 2014 fiscal year legal 'unusual expenses'.

Quoting JJJ (Reply 3):
They did not break any French or local (Iranian or Sudanese) law.

Their US subsidiary did not break any US law either.

But they obviously admit that they did break international sanctions against Iran and US law/regulations.

Quoting blueflyer (Thread starter):
The bank, the DOJ and New York's Department of Financial Services have been negotiating a settlement for several weeks,

US banks and companies which do business in France have to comply with French law. If they break French law, even in their non-France subsidiaries, they can be punished under French law.

Why should the US not be allowed the same ability to prosecute companies who break their laws as France (or Switzerland, or Japan, or Spain, etc) has?

Heck, France convicted a US citizen who has never been to France of manslaughter for actions he took in the US.
Not all who wander are lost.
 
JJJ
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 1:02 pm

Quoting rfields5421 (Reply 5):
But they obviously admit that they did break international sanctions against Iran and US law/regulations.

Those are local US sanctions, not international. The US merely found they could enforce them on a foreign firm since they have a substantial part of their business in the US.

According to the Le Monde article:

Nous avons vérifié que toutes les transactions incriminées étaient conformes aux règles, lois, réglementations, aux niveaux européen et français », a-t-il déclaré, ajoutant qu'il n'y avait « aucune contravention à ces règles ni aux règles édictées par les Nations unies ».

For those who don't speak French, the Governor of the French Central Bank states that no French or UN regulations were broken (otherwise they would have prosecuted BNP locally).

I guess quite a few people will be busy trading their dollars for some other currency as soon as they can get a good rate.
 
solarflyer22
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 1:47 pm

Quoting aa7295 (Reply 2):
This isn't Mom and Dad's bank in Boise, Idaho. This is an international bank that has more than enough resources to pay for proper legal representatives to do the proper checks to ensure they are in legal compliance. They failed to do this and potentially (until charged) broke the law.

No, you're totally and utterly incorrect. The US has 0, I mean 0, legal standing in this. I was shocked that the US did this as its even below our usual lows. Here are just a few of the issues:

1) The US has no right legally or morally to regulate extra-territorial commerce. Commerce conducted by two parties outside the US, not involving the US are free to conduct fair trade. What Iran and Turkey has nothing to do with America.
2) The burden of proof is low, there is no due process involved, there are no appeals and no trials by Jury. It is simply DoJ declaring you guilty and whatever gets negotiated after that.
3) These are US sanctions not UN nations sanctions. The US is free to blackball them from our economy for any reason, but to go in France's economy and then demand $10B is utterly outrageous.
4) This is a GROSS violation of the World Trade Organization agreements. You'll notice the term "WORLD" trade and both the US and France are founding members are bound by it. The US did not and does not bring these charges before the WTO because they know its a sure losing case.
5) Per the UN charter, attempting to enforce a economic or maritime blockade is an act of War requiring UN Security Council approval or its illegal. There is not a legal embargo on Cuba after 50 years.
6) Curbing bank payments used to purchase food imports, medicine and medical equipment for a civilian population is a clear Human Rights violation. You cannot impede a group of people's ability to feed themselves or treat themselves medically for any reason whatsoever, even in a declared state of war. International law is clear about this as it related to Gaza recently.
7) Payments made in dollars do not subject anyone to US laws. The US Federal Reserve may choose not to honor those dollars if they are deposited but doing so would collapse the Dollar and expose it as a fiat currency (it is.)

The dollar issue is a red herring. Iran and Turkey exchanged nearly $100Billion in Gold payments the last two years specifically to avoid the US. Pity the French who were not smart enough to do the same.
 
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pu
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 4:35 pm

Quoting JJJ (Reply 6):
since they have a substantial part of their business in the US

There would be no such thing as a French bank or France as we know it without America's perpetual commitment to confront tyrrany and repressive regimes on the global stage. Without America, Putin would have conquered half of Europe by now, China would have annexed all of East Asia ...and the Middle East, Africa and South America would just be a battlefront for competing dictators and warlords.

One cost the Americans pay is that when they make mistakes it is sometimes galactic and tragic in scale. They aren't always right. But thank God they exist and are fearless in prosecuting the long stream of criminal regimes and undemocratic forces that oppose them.



Pu
 
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Aesma
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 5:00 pm

Quoting aa7295 (Reply 4):
If America mandates that USD transactions cannot be used for anything relating to Iran, Sudan or wherever and mandates the scope to be any USD transaction, then they broke the law.

By affirming this (something that was not clear before or BNP wouldn't have done it), the US is saying that it doesn't want the dollar to be the go-to currency after all. Enforcing US laws on USD transactions anywhere in the world is just crazy, or stupid, you choose.

As an aside they're enforcing US laws on a foreign bank instead of a local subsidiary, opening a can of worms against the likes of Google, Apple, Facebook, etc., who regularly violate French laws (notably privacy laws and fiscal laws) by arguing they're based somewhere else.

Quoting rfields5421 (Reply 5):
But they obviously admit that they did break international sanctions against Iran and US law/regulations.

France and the EU have sanctions against Iran, there are UN sanctions too, none of which were broken. Only US sanctions that only US people/companies are supposed to enforce were broken. You know, the likes that make Iranian planes death traps.

BTW, Cuba is also part of the story, and Cuba and France always had good relations (with Iran too until Nicolas Sarkozy the American).
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
rfields5421
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 5:03 pm

Quoting solarflyer22 (Reply 7):
1) The US has no right legally or morally to regulate extra-territorial commerce.

Really.

Then France's actions to control the use of the word Champagne are also apparently illegal. China, Japan, India - are just a few of other countries which successfully enforce their local nation laws against international companies which violate those laws in transactions which occur totally outside their borders.

Almost the entire field of intellectual property, trademark protection and copyright protections is based on regulating extra-territorial commerce.


Quoting solarflyer22 (Reply 7):
there are no appeals and no trials by Jury.

There are trials by jury and appeals available to anyone charged with such illegal transactions. The US government prefers to take companies, and named officers, to court and impose criminal penalties.

That the French bank is attempting to negotiate a court approved settlement which admits not criminal liability shows that the bank and its officers were knowingly guilty of the violations. They are attempting to save face (and avoid criminal convictions and possible jail time for company officers) because they took a chance to make money with what they knew was illegal transactions and got caught.


Quoting solarflyer22 (Reply 7):
6) Curbing bank payments used to purchase food imports, medicine and medical equipment for a civilian population is a clear Human Rights violation.

No it is not. There are methods and processes to allow such imports and payment legally under the US embargo. Why didn't this bank and its customers choose to apply and use those legal methods? Likely because the goods purchased did not fit the categories you defined.
Not all who wander are lost.
 
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Aesma
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 5:20 pm

Quoting rfields5421 (Reply 10):
Then France's actions to control the use of the word Champagne are also apparently illegal.

Define those actions ? I'm sure it involves getting trademarks, or signing international treaties over the matter (bilateral agreements, I respect your appellations and you respect mine), otherwise there is no French law that can apply in the US and conversely. That's why we don't get your hormone grown beef or bleached chicken, and you don't get our unpasterized fromages.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
solarflyer22
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 6:59 pm

Quoting rfields5421 (Reply 10):
That the French bank is attempting to negotiate a court approved settlement which admits not criminal liability shows that the bank and its officers were knowingly guilty of the violations. They are attempting to save face (and avoid criminal convictions and possible jail time for company officers) because they took a chance to make money with what they knew was illegal transactions and got caught.

That's not my understanding at all. They've never pressed criminal charges or even threatened anyone by name. All I have ever seen them do is declare a violation, demand a penalty, then negotiate some smaller penalty so as to allow the business to operate with the United States. Everyone caves in because they want access to the American economy.

But again, two non-Americans making a deal that doesn't violate UN or local laws on an island make a peaceful deal in dollars. The US comes in and demands $10 Bill because they said so?

Quoting rfields5421 (Reply 10):
No it is not. There are methods and processes to allow such imports and payment legally under the US embargo. Why didn't this bank and its customers choose to apply and use those legal methods? Likely because the goods purchased did not fit the categories you defined.

Yes and No. They sanctioned the Iranian Rial itself, it its entirety. You handle the Iranian Rial, boom, sanctions violator. I handled it when I was there so I'm sanctions violator. You can't demand sanctions waivers and licenses so that people can feed themselves, you have no right to do so.

And the French were among the most aggressive in protecting Israel from the "Iranian Threat". This is just a money grab before the sanctions end courtesy of Treasury's staff Jacob Lew and David Cohen. Now the French may appreciate why Persians are so good in the Bazaars, they can spot a self interested liar from a mile away.
 
blueflyer
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RE: DOJ Wants To Draw Blood From French Bank

Fri May 30, 2014 7:12 pm

Quoting aa7295 (Reply 2):
Can you think for maybe one second.. that maybe... potentially... that they broke the law.

With respect, you misunderstood my post. I am not claiming BNP is being unfairly prosecuted or is innocent, I don't even care how much their fine is. I am frustrated that our financial regulators consistently find ways to be far tougher on foreign banks than domestic ones.

Quoting rfields5421 (Reply 5):
I don't know if it meets your criteria, but in 2013 - JPMorgan Chase paid $20 billion in fines and settlements

If it has been paid at the behest of bank regulators (private settlements should not count), it's a start, but compared to their relative size, it is still less than BNP is paying for a single case.

Quoting rfields5421 (Reply 5):
Why should the US not be allowed the same ability to prosecute companies who break their laws as France (or Switzerland, or Japan, or Spain, etc) has?

That's not the issue that I have. The issue is US regulators are more lenient on US banks than foreign banks. They can prosecute foreign banks to hell and back for all I care, but I expect the same diligence and zeal for US banks, and I am not seeing it.

Quoting JJJ (Reply 6):
Those are local US sanctions, not international. The US merely found they could enforce them on a foreign firm since they have a substantial part of their business in the US.

What you and others fail to realize is these transactions were not cash, but wire transfers, which means that at one point or another, they were cleared through the US Federal Reserve, just like wire transfers in euro between any two countries in the world are eventually cleared through a Eurozone central bank.

That is what is giving the US standing to sue.
 
Acheron
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RE: DOJ Wants To Draw Blood From French Bank

Sat May 31, 2014 12:39 am

Quoting aa7295 (Reply 4):
If America mandates that USD transactions cannot be used for anything relating to Iran, Sudan or wherever and mandates the scope to be any USD transaction, then they broke the law.

US law states you shouldn't give weapons to criminal organizations, yet the ATF gave weapons to the cartels.

You can't be expected to be taken seriously when you whine about Iran while at the same time you are gargling King Abdullah's balls in Saudi Arabia...

On the other hand, this kind of stuff will only give more reasons to foreign companies to drop the USD as the currency of choice for international trade.
 
BMI727
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RE: DOJ Wants To Draw Blood From French Bank

Sat May 31, 2014 1:08 am

Quoting solarflyer22 (Reply 7):
No, you're totally and utterly incorrect. The US has 0, I mean 0, legal standing in this.

   Holding American money does not make you subject to American laws.
Why do Aerospace Engineering students have to turn things in on time?
 
solarflyer22
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RE: DOJ Wants To Draw Blood From French Bank

Sat May 31, 2014 1:20 am

Quoting blueflyer (Reply 13):
What you and others fail to realize is these transactions were not cash, but wire transfers, which means that at one point or another, they were cleared through the US Federal Reserve, just like wire transfers in euro between any two countries in the world are eventually cleared through a Eurozone central bank.

That is what is giving the US standing to sue.

That's not exactly correct. The Fed is only moderately involved. It'd goes through CHIPS and SWIFT. Legal standing is totally different from legal authority or the right to claim $10 Billion in fines.

http://en.wikipedia.org/wiki/Clearing_House_Interbank_Payments_System

And there is no guarantee that it actually used CHIPS. We haven't seen evidence of that. Its possible and even likely they used some swapping mechanism on the sending and receiving banks. I am not even sure how they can claim which transaction is for what as there are likely thousands.

France is getting poned and for no good reason.

All of this is coming from the Office of Foreign Asset Controls (OFAC) in Treasury. The connection between OFAC and AIPAC is well known. And yes, Lew, Cohen, Szubin are all Jewish. That's not a anti-Semitic remark, its a demographic observation. They got their little feeling hurts by Iran's Ahmadenijad's 8 years of rhetoric and went on a sanctions crusade. Now ten years later a deal is on the table and they're just flat out going for money. It's just greed. pure and simple.

http://www.thepeoplesvoice.org/TPV3/...aamp-ofac-ratchet-up-us-sanctions-
 
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Aesma
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RE: DOJ Wants To Draw Blood From French Bank

Sat May 31, 2014 2:42 am

The US is negotiating a free trade agreement with the EU at the moment, something that is already pretty unpopular in France, and not helped by the NSA spying, nor by Google & co tax evasion. That story could be the straw that breaks the camel's back.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
blueflyer
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RE: DOJ Wants To Draw Blood From French Bank

Sun Jun 01, 2014 7:24 am

Quoting solarflyer22 (Reply 16):
That's not exactly correct. The Fed is only moderately involved. It'd goes through CHIPS and SWIFT.

SWIFT is not based in the US, but they don't do settlement or clearing. CHIPS (BNP is a member) and the Fed are in the US though, so whether it is the former or Fedwire that is used, isn't it the same result in the end?

Quoting Aesma (Reply 9):
the US is saying that it doesn't want the dollar to be the go-to currency after all.

I don't know that it is what it is saying, but with similar sanctions having hit ING and Standard Chartered in the past also for no reason other than using the dollar, I think most international banks are going to require that transactions be conducted in other currencies. Most likely the euro, which will have the dubious honor of being embargoed countries' go-to currency, but then again it is already drug traffickers' favorite money.

[Edited 2014-06-01 00:24:51]
 
solarflyer22
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RE: DOJ Wants To Draw Blood From French Bank

Sun Jun 01, 2014 3:54 pm

Quoting blueflyer (Reply 18):
I don't know that it is what it is saying, but with similar sanctions having hit ING and Standard Chartered in the past also for no reason other than using the dollar, I think most international banks are going to require that transactions be conducted in other currencies. Most likely the euro, which will have the dubious honor of being embargoed countries' go-to currency, but then again it is already drug traffickers' favorite money.

Or simply gold which is what Turkey did. The problem is that the US Dollar is the world reserve currency reserve and by enforcement actions like this you are giving nations incentive to not hold dollars and dump it. If people stop using dollars for international transactions, you're looking at an appreciable loss in its value.

Quoting blueflyer (Reply 18):
SWIFT is not based in the US, but they don't do settlement or clearing. CHIPS (BNP is a member) and the Fed are in the US though, so whether it is the former or Fedwire that is used, isn't it the same result in the end?

It's a weak argument if you ask me based on a technicality on CHIPS or FedWire. For $10 billion in fines, you're going need a legal hammer, not a technicality. I seriously doubt the operating agreement, between BNP and CHIPS, SWIFT or FedWire had any provision for this type of enforcement action based on unilateral US only sanctions.
 
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Aesma
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RE: DOJ Wants To Draw Blood From French Bank

Sun Jun 01, 2014 4:40 pm

Quoting blueflyer (Reply 18):
I don't know that it is what it is saying, but with similar sanctions having hit ING and Standard Chartered in the past also for no reason other than using the dollar, I think most international banks are going to require that transactions be conducted in other currencies. Most likely the euro, which will have the dubious honor of being embargoed countries' go-to currency, but then again it is already drug traffickers' favorite money.

Drug traffickers in which countries ? Also, some of those embargoes are highly debatable, the one on Cuba is probably helping the regime stay in power, for example.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams

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