The decision brings needed certainty for BNP and its asset management clients, which have been waiting about 10 months to hear whether the French bank could continue to advise pension funds and other retirement plans.
Banks involved in criminal or civil settlements often need exemptions from regulatory agencies to continue offering certain services, and those waivers are often granted. But US lawmakers have heaped pressure on government agencies to decline waivers for those banks that have admitted to wrongdoing.
Heightened scrutiny has left Credit Suisse, which pleaded guilty to aiding tax evasion last May, waiting for almost a year to hear whether it would receive an exemption for pension fund work from the labor department.
Last June, BNP pleaded guilty to sanctions violations and was forced for one year to suspend services clearing dollar-denominated transactions for its oil and gas business, where most of the alleged wrongdoing took place.
The labor department defended its decision to grant BNP a waiver, emphasising that the exemption came with numerous conditions. One is for BNP to have an independent auditor who will have unconditional access to computer systems, record books and personnel, according to a notice published on Wednesday.
“The interests of [retirement] plan participants would be better protected by imposition of the stringent conditions set forth herein,” the agency said. “It is unclear that the denial of the exemption application would have any meaningful effect on BNP’s behaviour.”
Public Citizen, a non-profit advocacy group, commended the agency for improving auditor requirements for BNP, but said the exemption should not have been granted given BNP’s criminal behaviour, which was a symbol of big banks running “amok over the American and world economies”.
“The DoL says that the conditions it is imposing with the waiver will ensure compliance with money management safety standards,” Public Citizen said. “That’s Alice-in-Wonderland logic: The DoL says that following its own rules wouldn’t affect BNP’s behaviour, but granting a wavier would.”
Public Citizen had also asked for a public hearing on the BNP case, which the labor department rejected, saying many of the issues raised by the group were addressed in another hearing on Credit Suisse in January.
As the first large global bank to plead guilty to criminal charges in the US in two decades, Credit Suisse’s settlement for allegations that the bank helped clients evade US taxes drew intense public reaction.
Lawmakers wrote a letter to the labor department calling on the agency to hold a hearing on whether the Swiss bank deserved an exemption to continue advising pension funds.
The agency declined to comment on when a decision would be made in the Credit Suisse case.
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