BNP Paribas and Credit Suisse: Criminal proceeedings in the USA

Once again European Banks have been threatened with large fines due to misconduct. The ‘Wall Street Online’ reports that investigations against BNP Paribas have been ongoing since 2009. The Manhattan District Attorneys Office as well as the Federal Prosecutor are united against the European bank who is said to have violated US sanctions against Iran, Cuba and Sudan. The charges against Credit Suisse are related to the charges of abetting tax evasion and their lack of co-operation with US tax authorities.  The institutions have been threatened with penalties of up to two billion US dollars.

According to the Wall Street Journal and the New York Times, Prosecutors are considering initiating criminal proceedings against BNP Paribas and Credit Suisse. This would be a change in the current approach in the US, usually the authorities would negotiate with the bank to implement a solution that avoids serious financial impacts. However, it appears that government institutions are now more wiling to place a cost on moral hazards, this include both subjective and moral hazards. Negotiating penalties, despite repeated and serious violations of the law, incentivises banks to continue their reckless and irresponsible behaviour.

Should a criminal case be implemented against these banks, the American Regulatory Authority can decide to withdraw their business licenses in America.

For more information on BNP Paribas click hier.

For more information on Credit Suisse click hier.

Bloomberg (12/05/2014) reports on Credit Suisse and BNP Paribus seeking leniency in the US.

The Wall Street Journal („BNP Paribus, Credit Suisse may face US criminal charges’, 30/04/2014)