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Us Fining Foreign Banks?


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#1 sanctus

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Posted 05 November 2015 - 05:52 AM

Hi all, was just curious how is it legally possible that the US can fine a non-US-bank for doing transactions, not done in the US, for not respecting US-sanctions? http://www.bbc.com/n...canada-34726690

 

 

 



#2 pgrmdave

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Posted 05 November 2015 - 05:17 PM

There are a number of ways they could have jurisdiction - it's possible that as a requirement to doing any business within the United States certain laws have to be followed (the most likely case). It's also possible that some of the money went through their New York branch (unlikely though).

#3 CraigD

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Posted 05 November 2015 - 11:10 PM

Hi all, was just curious how is it legally possible that the US can fine a non-US-bank for doing transactions, not done in the US, for not respecting US-sanctions?

Though I don’t know the details, which I expect will not be made available to the public, I believe the answer to this question is that New York state and US banking regulators can fine Deutsche Bank US$200,000,000 and $55,000,000 respectively because Deutsche Bank agrees to be fined. They agreed to be fined, and to fire 6 employees, because they agreed that a few of their employees had acted in violation of US sanctions agreements, because they want to continue to have good business relations with New York and the US, and because the fines are much smaller that the likely cost of lost business if these relations were jeopardized.
 

There are a number of ways they could have jurisdiction…

It’s important to distinguish between voluntary regulation, which companies like Deutsche Bank agree to follow, and laws, which are imposed by governments, involve police, courts, and potentially, jails.

My language here isn’t precise, but state and federal banking regulators don’t have jurisdiction over banks in the same way that police and courts have jurisdiction over individuals. The relationship between banks and their regulators is more similar to the relationship between peers entering into contracts.

#4 sanctus

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Posted 06 November 2015 - 02:32 AM

Makes sense, so it is more like "you wanna do business here? then pay else you can leave the US". So just the wording from bbc is wrong, the bank is not fined per se, but is paying for a permission to stay after pissing off the US.

 

Thanks!