A conspiracy theorist might note that all the recent huge banking fines have been against non-US banks. Could it be that US prosecutors are much keener to investigate foreign banks and do not look as closely at banks back home? Or are the US banks miraculously less corrupt?
The U.S. has historically had more robust anti-corruption laws and has been more aggressive about extending them to conduct of U.S. businesses operating abroad. For example, it is illegal under U.S. law for U.S. companies to bribe foreign officials, while it is not necessarily illegal under European laws, or not as aggressively prosecuted. U.S. banks have more experience operating under this regime and are more familiar as to how to toe the line. European companies are more likely to trip up, either because they have less experience with compliance or because they think they are less likely to get caught.
It's sad because it's not that they don't look closely. They do, but they condone - publicly.
HSBC "spent years committing serious crimes, involving money laundering for terrorists", and there's been no penal prosecution, with the public (let me repeat: public) justification that prosecuting it penally would lead to a too big loss for the economy.
There has been some discussion previously. Links here:
US banks have been prosecuted for anti-money laundering failures too. For example, in 2010, Wachovia (now part of Wells Fargo) paid $160m to settle charges relating to anti-money laundering failures. http://online.wsj.com/news/articles/SB1000142405274870405900...
At the heart of the French government’s campaign is the
concern that American prosecutors have created a two-tiered
system of justice: one in which American and British banks
escape criminal charges and the other that forces BNP to
plead guilty to sanctions violations and pay a record fine.
It is hard to reconcile this with the fact the governement just rejected a settlement of $12B from Bank of America, and is seeking $17B. They just settled with JP for $13B.
European banks are getting fined for Illegal tax shelters and violating sanctions, and US banks are getting hammered on mortgage fraud.
From TFA: "It is a cautionary tale of how European banks, spotting a lucrative business opportunity that American rivals shunned, opened their doors to countries under sanctions and ultimately exposed their reputations to the stain of criminal cases."
Just off the top of my head... I think that foreign banks do not have local political weight to throw around because they do not give many political donations and are not part of the revolving door of political appointments from the banking industry to the various regulatory agencies.
Why is there so much more motivation on the part of authorities to go after this type of crime rather than those that caused the financial collapse of 2008/2009? The financial collapse affected a lot more people here in North America, but I guess the issue is that it was local banks, not foreign ones.
It does seem like authorities like to go after foreign banks for large fines rather than local ones.
It's much easier to prosecute money laundering than it is to prosecute stupidity. Some people did illegal stuff way back then and got totally destroyed (see what we did to the mortgage brokers). That didn't extend to the vast majority of people though because they were just stupid, not criminal.
What I take from this is that you pretty much can get away with anything (including terrorism) as long as you do it from within a corporation and have enough money to pay the USA government any fine it imposes.
We've already decided corporations can have political beliefs (Citizens United) and religious beliefs (Hobby Lobby); I say it's high time we also decide they can also be declared criminal, and be subject to more than just fines.
Not even the latter, as those corporations could simply declare bankruptcy and the individuals responsible could just walk away with no criminal record.
Frankly, I'd be happy if bitcoin facilitated these "criminal" transactions to a much greater degree. I'm absolutely no fan of Iran or Cuba or any of the other sanctioned countries, but I think the idea that economic sanctions do more harm than good.
If BTC (or some analogous currency) does become a standard value store on the international market, I'll be interested to see if governments continue pursuing the impossible goal of imposing economic sanctions like this or if they change tactics. My guess is they'll continue pursuing the impossible goal.
Could someone explain to me (as a non-American non-financial type) the basis of US jurisdiction over banks not based in the US? Is it because they have a presence in the US, or some other reason?
Basically, the US government's approach is "If you want to clear US dollars, you must conform to our laws."
The following explanation will simplify things somewhat in the interest of brevity.
Basically, all dollars (the ones that aren't physical cash, anyway) are ultimately held in accounts at one of the Federal Reserve banks. Banks like Citi, Wells Fargo, JP Morgan and Bank of America have accounts at the Federal Reserve. When clients of those banks transfer US dollars to someone who's a client of another bank, the real transfer of dollars takes place between the banks' accounts at the Federal Reserve.
If your bank doesn't have an account at the Federal Reserve, then it needs to have an account with a bank that has an account at the Federal Reserve. (Or with a bank that has an account with a bank that has an account at the Federal Reserve, etc.)
To be a member of the Federal Reserve, you need to hold a banking license in the US, which means that you are subject to US laws (because, if you ignore them, the US authorities will take your banking license away). You'll also have an office there (probably in New York) but that's kind of incidental.
So, if you're a bank with a US banking license, and one of your clients annoys the US authorities, they can basically say "Stop doing business with that client." (or, in other words, impose sanctions). If you refuse to comply, they can take your licence away.
That's effectively what happened with BNP Paribas - they were clearing US dollar transactions for clients that were subject to US sanctions. So, BNP has been effectively grounded for a year. Instead of going direct to the Federal Reserve to transfer US dollars to other banks, it will need to become a client of another bank that's a member of the Fed.
It's embarassing, it'll cost them money (they'll have to pay the other bank) and they may well lose some business (from clients who want to deal with a top-tier US dollar clearing bank).
In theory, they could have just turned around and said "Screw you, we're not paying any fine!", in which case the US authorities would have withdrawn their US banking license, seized any assets they could get their hands on (e.g. the dollars they have in their account at the Federal Reserve) and blacklisted the company, so no other US bank would do business with them. That would effectively have prevented them from doing any business in US dollars.
To be a proper, credible international bank like BNP, you need to be able to handle US dollars. Hence, BNP is prepared to pay the fine. The alternative would be to effectively downsize massively.
Even though BNP is a foreign bank, it has to have a license to conduct banking in the United States. If they refuse to co-operate, the US will cancel that license. Given the amount of fine they are willing to pay, it is clear that the US business is important and profitable to them.
> Could someone explain to me (as a non-American non-financial type) the basis of US jurisdiction over banks not based in the US?
Entities physically present in, doing business in, and subject to licensing by the US and individual US states are subject to US law and the law of those states no matter where they are headquartered.
From what I read about this case the US threatened to withdraw BNP's US banking license. So even though the US does not actually have jurisdiction, they can choose to prevent a bank from trading in their country if they don't like their actions.
I believe it has to do with the way US dollars are traded on the world market. In effect any bank holding US dollars has to hold them on US soil which, by default, brings US dollar transactions under US jurisdiction.
They mentioned criminal penalties, but no mention of jail times. Tens of billions in transactions, 8.9 billion in fines. It was probably worth it even after getting caught.
[+] [-] joosters|11 years ago|reply
[+] [-] pacofvf|11 years ago|reply
2. November 2013 $13 billion: JPMorgan Chase
3. January 2013 $11.6 billion: Bank of America
4. March 2014 $9.5 billion: Bank of America
5. June 2011 $8.5 billion: Bank of America
6. January 2014 $1.7 billion: JPMorgan Chase
http://timesofindia.indiatimes.com/world/us/Top-10-fines-imp...
[+] [-] rayiner|11 years ago|reply
[+] [-] pizza234|11 years ago|reply
It's sad because it's not that they don't look closely. They do, but they condone - publicly.
HSBC "spent years committing serious crimes, involving money laundering for terrorists", and there's been no penal prosecution, with the public (let me repeat: public) justification that prosecuting it penally would lead to a too big loss for the economy.
There has been some discussion previously. Links here:
http://www.theguardian.com/commentisfree/2012/dec/12/hsbc-pr...
http://www.rollingstone.com/politics/blogs/taibblog/outrageo...
update: added links
[+] [-] jackgavigan|11 years ago|reply
Last year, the Federal Reserve took enforcement action against Citi for poor anti-money laundering controls. http://www.forbes.com/sites/halahtouryalai/2013/03/26/fed-hi...
[+] [-] MartinMond|11 years ago|reply
[+] [-] jcampbell1|11 years ago|reply
European banks are getting fined for Illegal tax shelters and violating sanctions, and US banks are getting hammered on mortgage fraud.
I don't see a conspiracy.
[+] [-] bernardom|11 years ago|reply
[+] [-] bhouston|11 years ago|reply
Just off the top of my head... I think that foreign banks do not have local political weight to throw around because they do not give many political donations and are not part of the revolving door of political appointments from the banking industry to the various regulatory agencies.
[+] [-] the_ancient|11 years ago|reply
So any "investigation" into a US bank is like an Internal Investigation, and we all know how those work... can you say coverup?
[+] [-] bhouston|11 years ago|reply
It does seem like authorities like to go after foreign banks for large fines rather than local ones.
[+] [-] confluence|11 years ago|reply
[+] [-] ivanca|11 years ago|reply
[+] [-] evmar|11 years ago|reply
If it's a criminal case, you'd think they could subpoena the necessary records. It's not something to be making a plea bargain over.
[+] [-] lostcolony|11 years ago|reply
[+] [-] chriscool|11 years ago|reply
http://www.rollingstone.com/politics/blogs/taibblog/outrageo...
But note that dealing with Iran, Sudan and some other countries forbiden by the US State Department is legal in many european countries.
[+] [-] joosters|11 years ago|reply
[+] [-] Zikes|11 years ago|reply
[+] [-] radmuzom|11 years ago|reply
[+] [-] cdibona|11 years ago|reply
[+] [-] x1798DE|11 years ago|reply
If BTC (or some analogous currency) does become a standard value store on the international market, I'll be interested to see if governments continue pursuing the impossible goal of imposing economic sanctions like this or if they change tactics. My guess is they'll continue pursuing the impossible goal.
[+] [-] jackgavigan|11 years ago|reply
MtGOX had its accounts with Dwolla and Wells Fargo seized by US authorities for operating as a money transmitter without a license. http://www.theverge.com/2013/8/23/4651926/us-government-seiz...
[+] [-] mnw21cam|11 years ago|reply
[+] [-] jackgavigan|11 years ago|reply
The following explanation will simplify things somewhat in the interest of brevity.
Basically, all dollars (the ones that aren't physical cash, anyway) are ultimately held in accounts at one of the Federal Reserve banks. Banks like Citi, Wells Fargo, JP Morgan and Bank of America have accounts at the Federal Reserve. When clients of those banks transfer US dollars to someone who's a client of another bank, the real transfer of dollars takes place between the banks' accounts at the Federal Reserve.
If your bank doesn't have an account at the Federal Reserve, then it needs to have an account with a bank that has an account at the Federal Reserve. (Or with a bank that has an account with a bank that has an account at the Federal Reserve, etc.)
To be a member of the Federal Reserve, you need to hold a banking license in the US, which means that you are subject to US laws (because, if you ignore them, the US authorities will take your banking license away). You'll also have an office there (probably in New York) but that's kind of incidental.
So, if you're a bank with a US banking license, and one of your clients annoys the US authorities, they can basically say "Stop doing business with that client." (or, in other words, impose sanctions). If you refuse to comply, they can take your licence away.
That's effectively what happened with BNP Paribas - they were clearing US dollar transactions for clients that were subject to US sanctions. So, BNP has been effectively grounded for a year. Instead of going direct to the Federal Reserve to transfer US dollars to other banks, it will need to become a client of another bank that's a member of the Fed.
It's embarassing, it'll cost them money (they'll have to pay the other bank) and they may well lose some business (from clients who want to deal with a top-tier US dollar clearing bank).
In theory, they could have just turned around and said "Screw you, we're not paying any fine!", in which case the US authorities would have withdrawn their US banking license, seized any assets they could get their hands on (e.g. the dollars they have in their account at the Federal Reserve) and blacklisted the company, so no other US bank would do business with them. That would effectively have prevented them from doing any business in US dollars.
To be a proper, credible international bank like BNP, you need to be able to handle US dollars. Hence, BNP is prepared to pay the fine. The alternative would be to effectively downsize massively.
[+] [-] radmuzom|11 years ago|reply
[+] [-] dragonwriter|11 years ago|reply
Entities physically present in, doing business in, and subject to licensing by the US and individual US states are subject to US law and the law of those states no matter where they are headquartered.
[+] [-] DangerousPie|11 years ago|reply
[+] [-] awjr|11 years ago|reply
[+] [-] privong|11 years ago|reply
That is essentially it.
[+] [-] unknown|11 years ago|reply
[deleted]
[+] [-] protonfish|11 years ago|reply
[+] [-] snarfy|11 years ago|reply
[+] [-] phantork|11 years ago|reply
[+] [-] chriscool|11 years ago|reply
http://www.wimbledon.com/en_GB/suppliers/
And JP Morgan, Chase and American Express are sponsoring the US Open:
http://www.usopen.org/sponsorship/
...