Attestation Update – A&A for CPAs

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Negotiations underway for multi-billion dollar settlement with BNP Paribas for violating trading sanctions

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Wall Street Journal reports Justice Dept. Seeks More Than $10 Billion Penalty Form BNP Paribas.

At issue is a large volume of transactions and dealings with countries for which the U.S. has banned any financial dealings. We’re talking loaning money and holding (likely hiding) deposits for countries like Iran, Sudan, and North Korea, along with businesses and individuals in those countries.

Negotiations are reportedly underway between the bank and the Justice Department, Manhattan U.S. Attorney, and Manhattan DA. From the article it sounds like the N.Y. Department of Financial Services is in the discussions. After reading about the Credit Suisse settlement, I’ll guess the SEC, FDIC, and OCC are in the conversation as well. Maybe the FRB.

What are the negotiating positions?

The Feds are looking for a $10B fine, saying that is already discounted in relation to the huge volume of trading going on. They want a criminal plea. Also looking for a short ban from settling transactions through banking systems in New York. The last point would essentially be a ban from any transaction with a client who has activity in the U.S.

The bank is looking for an $8B fine according to the article based on reporter’s sources involved in the negotiations. That is up from an announced $1.1B reserve earlier this year. The bank does not want a short ban from settlements through the US banking system.

$10B vs $8B.  Criminal plea vs. deferred prosecution agreement.  Ban vs. no ban from banking system. Quite a big gap on positions, except for the small difference on the digit between the $ and B. That’ll be easy to negotiate. The others? Not so much.

Article suggests a settlement is still weeks away.

Long string of settlements

Other big settlements for flouting US laws on sanctions-violations and money laundering? A partial list from the article:

Sometimes it seems like I need to set up by own database to keep track of all the huge financial settlements all these banks are signing. Having a hard time keeping each violation by each bank on each issue straight without some notes.

By the way, Standard Chartered “repaired” 59,000 transactions, meaning they hid the origin or source of $250 Billion of wire transfers.

By the way, I can’t wait to read the statement of facts that go along with the settlement agreement. I hope it isn’t as eye-popping and upsetting as the Credit Suisse tax-evasion scheme but I’m not too confident of that. Hint: Credit Suisse has been doing the heavy-lifting to let clients launder money since before there was an income tax in the U.S.

I don’t get it

Many years ago, I worked in the accounting department of a bank for a short time. Spent a few years auditing banks and S&Ls while working for KPMG’s predecessor PMM. I don’t recognize the attitude of bankers I see in all these cases.

I don’t get this seemingly industry-wide, apparent contempt for U.S. banking laws. Can anyone help me get my head around that?

Written by Jim Ulvog

May 30, 2014, 7:18 am at 7:18 am

Posted in Other stuff

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