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BNP Paribas sets up sanction-savvy schemes to get around dollar ban

Published time: July 01, 2014 18:38
Edited time: July 02, 2014 08:21
AFP Photo

AFP Photo

France’s largest bank, BNP Paribas, is devising ways to retain its US customers after being banned from dollar-based transactions over breaking US sanctions. The ban will contribute at least $40 million more to a record settlement of nearly $9 billion.

The bank pled guilty on Monday to two criminal charges of violating US sanctions against Sudan, Cuba and Iran, and will be paying out $8.97 billion.

While the sum is an obvious blow, the bank’s current primary problem is the possibility that it may lose many of its US customers as a result of its inability to process dollar-based transactions which will come into force on Jan 1 next year.

Firstly, BNP Paribas will need to spend some $40 million on sourcing and using third-party banks. Additionally, it will not be able to serve as a clearing agent for other banks.

The system will take half a year to devise and develop before the “dollar clearing” is imposed. The premise behind its development will be to ensure it operates so seamlessly that its customers will be unaware that a third party – the usage of which is expected to cost the bank millions of dollars – is involved.

“The biggest worry would be losing clients, but so far it looks to be contained,” Jean-Pierre Lambert, an analyst for Keefe, Bruyette & Woods in London, told Bloomberg. “They want to make sure it’s set up properly, so that’s probably why they negotiated a transition period.”

In addition to third-party banks, BNP Paribas’ technology infrastructure will have to be adjusted to adapt to its changing economic conditions.

Under the terms of the settlement, BNP said that it would not be clearing any transactions instigated by oil and gas trade finance departments across several countries including Italy, Singapore and Switzerland.

The hiatus placed upon the bank’s dollar-clearing privileges ignited impassioned responses from Italian, Belgian, British, French and Swiss regulators.

BNP reiterated that it would not be attempting to sidestep the ban by offloading business to other departments within the same firm.

Comments (19)


tartanpion trucmuche 02.07.2014 14:45

Davood 02.07.2014 08:59

If the Frenchies are smart, which they are not, they would look to China and the Yuan. He ll, there are Chinese police in Paris protecting Chinese tourists for Pete's sake!


French governments are always one war late. They still have not understood that China is soon to become the most powerful nation on earth. Europe must join with the Asian block and everything in between to become a huge economic and social platform.


Douglas Blair 02.07.2014 14:40

Who gave the States the right to tell another sovereign country what they can and cannot do. France should tell America to pound sand . The world needs to set up another SWIFT type system and not include the States


Terry Ross 02.07.2014 13:47

Jean-Claude Meslin 02.07.2014 11:12

Who will have the guts to initiate a total boycott of everything made in America (including the people). Like the US have done for Cuba during over half a century..


Does America actually make anything anymore, apart from weapons? Thought most production had been outsourced to China, Korea, Vietnam etc.
Loss of trade would not bother US.
US recorded a trade deficit of $47 bn in April . From 1950 until 2014, US has averaged monthly trade deficit of 12.5bn.
When you operate the world's reserve currency such niceties as trade surplus don't matter.

View all comments (19)
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