Anyone else having trouble keeping track of the rumors on the forex settlement talks?
Previously discussed that a few too-big-to-fail/jail/manage banks might have fines in the range of $0.5 to $1.0 billion apiece. Looks like the rumors of settlement amounts were off a lot.
A few articles that leave me scratching my head: …
Previously mentioned the big banks are under investigation for allegedly manipulating forex: Next banking fiasco? Manipulating foreign exchange rates? Those are the rates used to trade currencies. In addition to admitting manipulation of Libor, many banks now stand accused of manipulating forex.
Just two updates..
10/30 – Wall Street Journal – Big Banks Brace for Penalties in Probes – Tons of leaks feed the story of the typical cast of big banks being in negotiations to settle allegations of their manipulating foreign exchange rates, or forex. Big news to me is the banks are all trying to settle at the same time with all of the regulators.
(If one company reaching a simultaneous agreement with every regulator is called a global settlement, then if every company in the industry reaches an agreement with all regulators on the same day, would that be called a global global settlement? Universal global settlement?)
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My previous post described a comment by Sam Antar during his CPE session that the fines arising from of a long list of financial fiascos are essentially a tax on illegal behavior.
He made another comment in that session that I wanted to describe in detail. He said these frauds are a cancer destroying capitalism.
I had opportunity to visit with him a few weeks ago and asked him to expand on this idea. I will summarize what we discussed.
Cancer destroying capitalism
He indicated the foundation of capitalism is reliability of financial information. If you can trust financial information you read then we can do business with each other.
He says the extent of frauds we have seen are leading people to lose faith in financial information. That leads to losing faith in their counterparties. Therefore people have less trust. In financial terms that means the risk premiums for transactions go up. The interest rate built into a transaction increases and the return drops.
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Frauds are a cancer destroying capitalism Read More »
Several weeks ago I listened to a continuing education class presented by Sam Antar, current felon and formerly CFO of Crazy Eddie.
In the session, he made two comments that caught my ear. First, the fines we read about as a result of various financial scandals are just a tax on illegal behavior. Second, those fiascos are, he said, a cancer destroying capitalism.
After the session, I had opportunity to interview him by phone and follow-up on both of those ideas.
Fines are a tax on illegal behavior
He indicated that essentially no one has been implicated in any of the disasters we’ve read about, which I have discussed extensively on my blog.
He said corporations don’t commit crimes. People commit crimes.
And the people who committed crimes aren’t going to jail.
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Huge fines are a tax on illegal behavior Read More »
Federal Reserve officials gave too-big-to-fail bank leaders a warning at a private lunch that they need to improve the risk management and ethical behavior inside the banks. The alternative put on the table is a suggestion that if they are too large to manage then they may need to be broken up into smaller banks that can be managed.
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Warning to bankers that too-big-to-manage might mean too-big-to-existRead More »
Warning to bankers that too-big-to-manage might mean too-big-to-exist Read More »
The Wall Street Journal reports ”Flipped” Bankers Aid U.S. in Foreign-Exchange Probe – Criminal Charges Are Expected as Early as Next Month.
Looks like it is time to pay attention to a new fiasco. After manipulating LIBOR comes the foreign exchange rates, or forex.
Article appears to be based on lots of leaks. In a tossup between guessing whether the Justice Department or the banks are leaking most of the info, I’ll guess the slightly higher probability is the feds.
This new fiasco is apparently developed from information obtained during the LIBOR investigations.
Individual enforcement action this time
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Next banking fiasco? Manipulating foreign exchange rates?Read More »
Next banking fiasco? Manipulating foreign exchange rates? Read More »
As mentioned yesterday, StanChart did get a $300M fine for running afoul of their 2012 agreement. Their software to monitor wires for possible violations of money laundering laws didn’t pick up on one or several million wires that should have been flagged.
In addition to the fine, the bank agreed to permanently halt US dollar settlement for about 300 high-risk clients in Hong Kong and UAE.
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Standard Chartered draws $300M fine for money laundering issuesRead More »
Standard Chartered draws $300M fine for money laundering issues Read More »
Financial Times is reporting StanChart faces fresh $300M US settlement.
This is up from the previously rumored amount of $100M, and would be close to the amount from the previous settlement.
Article says an agreement may be signed this week.
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Standard Chartered penalty rumored to be $300M for this round of money laundering issuesRead More »
Standard Chartered penalty rumored to be $300M for this round of money laundering issues Read More »
A few stories paint a clearer picture for me – cheating your regulator, some regulators getting frustrated with the number of issues, the disconnect from personal responsibility, and bringing psychology into the analysis.
Why are there sooooo many scandals involving banking?
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What is wrong with big banks? Read More »
Standard Chartered is in trouble again for money laundering issues.
Either I’ve been blogging long enough to see cycles repeating or the too-big-to-fail banks are getting more casual in their casual efforts to comply with US law. Or maybe I’m just suffering from confirmation bias.
Their software that is supposed to flag suspicious transactions allegedly failed to identify a million transactions that should have been reported to US authorities for review. That is according to the monitor installed to watch their compliance.
Unknown yet how many, if any, of the million suspicious wires were actually illegal.
Settlement negotiations are underway. Discussion in the air suggests a fine of $100M is possible. The bank’s chief executive has reportedly flown to New York to participate in the negotiations.
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Standard Chartered under review for money laundering issues. Again.Read More »
Standard Chartered under review for money laundering issues. Again. Read More »
Previously discussed that maybe BNP Paribas got off easy for illegally laundering $190 billion.
This post will give some context to the fine.
The $8,973M fine is equal to 6,593M Euros.
For the rest of this article, all amounts are in millions of Euros.
The bulk of the evasion of sanctions ran from 2002 through 2009 but continued into 2012, well after the bank knew the investigation was underway. That is concentrated on 8 years but stretched out to about 11 years. Let’s assume the volume was actually dropping in ’11 and ’12 so it is essentially a 10 year run of money laundering.
That means the fine was paid in one year, but it is an accumulation of 10 years activity. Thus we can amortize the fine over 10 years
Fine in relation to financial statements
Let’s look at the fine in relation to the 2013 consolidated financial statements, which can be found here on this page of their website.
Balance sheet (page 126)
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Fine against BNP Paribas for money laundering in context of their financial statementsRead More »
Fine against BNP Paribas for money laundering in context of their financial statements Read More »
Let’s look at the fines and penalties from a different perspective.
Perhaps the consequences are just a cost of doing business. Perhaps the bank got off easy.
Let’s look at the penalties:
Looking closer…
Fine – public comments are it will not have any impact on the bank. …
Those horrid penalties on BNP Paribas. Are they just a cost of doing business?Read More »
Those horrid penalties on BNP Paribas. Are they just a cost of doing business? Read More »
I previously mentioned the total penalty BNP Paribas agreed to pay for laundering money to evade U.S. trade sanctions was $8,833.6M. The updated WSJ article said the total settlement is $8.97B. After realizing the disconnect, I went back to the federal plea deal. I missed that amount until this morning.
The forfeiture is $8,833.6M, which represents the amount the feds say on page 1 of the plea deal is …
Total BNP Paribas fine is $8.97 billion for money launderingRead More »
Total BNP Paribas fine is $8.97 billion for money laundering Read More »
BNP Paribas has settled up for their systemic efforts to use the U.S. banking system to launder money for Iran, Sudan, and Cuba.
Criminal pleas
Here are the plea agreements:
Volumes
The dollar amount of laundered money is 6 times larger than any previous press reports suggest. All earlier comments said about $30B was involved.
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That’s a report from DealBook – BNP Paribas Expected to Plead Guilty and Pay $8.9 Billion Fine.
Leaks to the newspaper say the plea deal could be announced on Monday, June 30. Final details will be worked out this weekend.
Looks like most of the transfers were from 2002 through 2009, but some carried on into 2012.
Sanctions are starting to shape up as follows:
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BNP Paribas settlement expected Monday Read More »