Swiss regulator slaps BNP's Swiss arm with sanctions after probe

1st July 2014, Comments 0 comments

Switzerland's financial regulator on Tuesday slapped the Swiss unit of embattled BNP Paribas with a two-year ban from working with anyone affected by US and EU sanctions after determining it had breached US embargos.

FINMA, which also ordered BNP Suisse to increase its capital buffer, said it had carried out a separate probe from the one in Washington which led to a record $8.9 billion-fine for the branch's parent company over embargo violations.

The Swiss regulator said in a statement its probe had found that BNP Suisse had "seriously violated its duty to identify, limit and monitor the risks involved in making transactions with business partners in countries under US sanctions."

While France's largest bank was found by US authorities to have breached sanctions on Cuba, Iran, Myanmar and Sudan, the Swiss wing had especially violated the sanctions against Sudan between 2002 and 2007, FINMA said.

The bank had for instance used third-party banks to mask that they were handling transactions for Sudanese clients, and provided a large amount of credit to finance Sudanese oil trading.

In line with common international practice, Swiss authorities do not usually enforce foreign governments' legislation and would generally not step in to oblige companies to adhere to embargoes and sanctions imposed by anyone besides Bern, explained FINMA spokesman Tobias Lux.

The regulator stressed that its probe had not shown any violations of Swiss sanctions.

Swiss law does however demand that banks at all times "assure proper business conduct and risk management," and BNP Suisse had clearly failed in respect to the latter, Lux told AFP.

FINMA said in its statement that the branch had "exposed itself to unduly high legal and reputational risks and violated requirements for adequate organisation under Swiss supervisory law."

FINMA had therefore decided to impose a two-year ban on all business with any firms or persons affected by US or EU sanctions, and said it would bring in a third party to ensure the bank adhered to the ban.

In light of the high risks the bank had exposed itself to by violating US sanctions, the regulator also ordered it to shore up additional capital reserves to protect against operational risks.

FINMA said it would continue its investigations into who among board members, management and employees of the bank were involved in the sanction breach.

© 2014 AFP

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