Cuba: More Banks Under Scrutiny for Sanctions Violations

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From AFP:

After BNP, U.S. may hit other banks for sanctions-busting

After French giant BNP Paribas, other big European banks like Credit Agricole, Deutsche Bank and UniCredit may be in the cross-hairs of U.S. authorities for sanctions-busting.

U.S. authorities on Monday slammed BNP, France‘s largest bank, with a record $8.9 billion in penalties for violating U.S. economic sanctions against Iran, Sudan and other countries and pleaded guilty to criminal charges.

The blow raised speculation that some of its rivals in Europe would be punished, but less severely.

The United States has focused its investigations on dollar operations of a handful of European banks with countries blacklisted by the U.S.: Iran, Sudan, Cuba, Syria and North Korea.

The probes, begun in 2009, are looking at the alleged transfer of billions of dollars to the accounts of blacklisted entities, which benefited from a U.S. legal loophole that closed in 2008.

The investigations are being led by several U.S. authorities: the Justice and Treasury departments, the Federal Reserve and New York state’s Department of Financial Services.

French bank Societe Generale recently opened an internal investigation and said it was holding talks with the Office of Foreign Assets Control, the Treasury‘s agency that enforces U.S. economic sanctions.

French rival Credit Agricole is investigating dollar transactions, especially by Credit Agricole CIB, its corporate and investment banking arm.

Both banks say they are cooperating with U.S. authorities.

Germany’s largest bank, Deutsche Bank, is suspected of having business transactions with entities in Sudan, Iran and Syria, according to people close to the situation.

On Wednesday, the bank told AFP it was providing information requested by U.S. regulatory authorities.

“While we cannot with any degree of certainty predict the effect these matters will have on us, they have the potential to result in the imposition of significant financial penalties or have other adverse consequences for us,” Deutsche Bank spokesman Michael Golden said in an email.

Credit Suisse analysts have estimated the German bank is facing a $3.3 billion U.S. fine.

The second-largest German bank, Commerzbank, revealed in 2010 that its Iran-linked dollar transactions were under investigation by the United States.

It has not estimated the size of a potential penalty.

U.S. authorities also are investigating the German subsidiary of Italy‘s largest bank, UniCredit, for transactions with Iran. UniCredit has set aside more than a billion euros ($1.4 billion) for legal costs.

In addition, the U.S. has probes under way on manipulation of interbank interest rates, tax evasion and foreign-exchange market rigging.

British bank Barclays and Switzerland’s UBS and Credit Suisse have already been severely punished as part of U.S. efforts in these areas, and other decisions are in the pipeline.

The European banks‘ large provisions for U.S. investigations come as European regulators, including the European Central Bank, insist they maintain sufficient capital buffers to weather a financial crisis.

The banks are expected to set aside $39 billion in litigation costs this year after taking $37 billion so far, Credit Suisse analysts said in research note, adding the banks would still be able “to absorb other costs.”