BNP Paribas May Settle Money Laundering Charges - Analyst Blog

By Zacks Equity Research,

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Paris-based BNP Paribas SA ( BNPQY ) will likely pay nearly $3.5 billion to the U.S. regulators to resolve investigations into the money laundering issues raised against it. This information was disclosed by the persons familiar with the case.

BNP Paribas' dealings with sanctioned countries including Sudan, Iran and Cuba are under probe. The agencies involved in the investigations are the Federal Bureau of Investigation, offices of Manhattan U.S. Attorney and Manhattan District Attorney, the Justice Department's criminal division in Washington, and New York's Department of Financial Services.

Notably, the negotiations for settlement are still at a nascent stage and the actual amount to be paid by BNP Paribas has not been finalized. The deal could possibly be reached as early as next month. Further, the law enforcement agencies are also expected to seek a guilty plea from BNP Paribas.

Additionally, the regulators are considering the filing of a criminal charge against BNP Paribas on the ground that the bank did not fully co-operate during the investigation period. Also, they allege that the company continued with its dealings with the sanctioned countries even after being asked to stop the same.

BNP Paribas is not the only foreign bank to be prosecuted on money laundering charges. Already, the U.S. subsidiaries of 9 global banks including those of HSBC Holdings plc ( HSBC ), ING Groep NV ( ING ) and Barclays PLC ( BCS ) have reached settlements with the law enforcement agencies over similar charges.

Nevertheless, in terms of fine, BNP Paribas' penalty (though not final) is likely to be the highest. Till now, HSBC has paid the biggest fine of roughly $1.9 billion to resolve money laundering charges in 2012.

For BNP Paribas, the magnitude of penalty could significantly hurt its performance. Though the company is one of the stronger European banks, the present overall macroeconomic scenario coupled with the above-mentioned fine could weigh on the bottom line.

Currently, BNP Paribas carries a Zacks Rank #4 (Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: BCS , BNPQY , HSBC , ING

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