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BNP Paribas nearing settlement for $30B of money laundering. Getting a bargain at $8B penalty?

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The Wall Street Journal reports BNP Near Settlement With U.S. for Up to $9 Billion.

The article says the bank and U.S. prosecutors have agreed on the broad terms of the settlement, which would include:

  • Penalty in range of $8B to $9B
  • Plead guilty to one criminal charge
  • Ban on dollar settlement, likely in range of several months
  • Firing of at least 30 employees

The U.S. prosecutors are accusing the bank of laundering around $30B of transactions, primarily for Sudan related to oil sales. Wow. That is the first mention I recall of the volume of laundering activity.

The wires were routed through regional banks to hide that the money was going into or out of Sudan or Iran. A variety of correspondent banks were used to hide the source or destination of funds along with the customer. This is apparently a new technique, compared to the traditional ‘stripping’ method used to hide customer data.

The article says for 10 years BNP has been the preferred bank companies and individuals wanting to circumvent the U.S. trade ban.

Just as a guess, I would imagine that ‘preferred launderer’ is a marketing tag line that would be used in verbal presentations only and not in any written or web-based advertising.

A bargain at $8B?

The article has a depressing chart that shows the volume of money laundered and the penalty for 5 banks. The graph then calculates the dollar amount of penalty for each dollar of accused laundering. My summary of the results, which I’ll put in quotes since all the data is from the article, merely resorted and changed to billions:

Bank / Penalty per dollar / $ laundered / $ penalty

BNP / $0.27 to $0.30 / $30B / $8B – $9B

ABN Amro / $0.15 / $3B / $0.5B

Credit Suisse / $0.45 / $1.2B / $0.5B

Standard Chartered / $1.00 / $0.7B / $0.7B

RBS / $3.13 / $.032B / $0.1B

There isn’t a strong pattern, because each case is different.  There does seem to be a volume discount though.  The guilty plea and dollar settlement ban make the BNP penalty much costlier than the calculated dollar amount above. Even so, there is a discount for BNP and Credit Suisse.

Written by Jim Ulvog

June 23, 2014, 9:19 am at 9:19 am

Posted in Pondering

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