BNP Paribas Faces Potential Fine as U.S. Messaging Probe Resolution Nears

BNP Paribas (BNPP.PA), the largest bank in the eurozone, is on the verge of resolving a U.S. investigation into its employees' use of unapproved messaging platforms, according to its mid-year earnings report released on Thursday. The resolution may lead to the French bank facing a fine as part of the agreement.

The U.S. Securities and Exchange Commission (SEC) initiated an examination in 2021 to assess how Wall Street banks were monitoring their employees' digital communications, encompassing email and messaging apps like WhatsApp. Subsequently, the Commodity Futures Trading Commission (CFTC) also delved into the matter, as disclosed in the bank's reports.

As part of its mid-year earnings report, BNP Paribas set aside 125 million euros ($139 million) to address unspecified litigation. However, the bank's spokesperson declined to provide further details regarding the nature of this provision.

In its statement, BNP Paribas revealed that it has reached "proposed resolutions" with the CFTC and SEC regarding a probe related to "compliance with records preservation requirements relating to the use of unapproved electronic messaging platforms for business communications." Nonetheless, the bank clarified that these proposed resolutions are still subject to finalization by the CFTC and SEC.

Notably, French competitor Societe Generale (SOGN.PA) disclosed earlier this year that it, too, was part of the same U.S. investigation.

In a related matter, Britain's HSBC reached an agreement with the CFTC in May to pay $75 million to settle charges related to manipulative and deceptive trading, as well as record-keeping failures.

It's worth noting that more than a dozen banks previously faced penalties totaling $1.8 billion for violations related to similar communications issues in September.

BNP Paribas' willingness to resolve the U.S. probe marks a significant step towards addressing regulatory concerns and underscores the importance of compliance with records preservation requirements for digital communications. As the proposed resolutions await finalization, the bank remains under scrutiny by U.S. regulators, emphasizing the need for financial institutions to ensure their employees' communication practices align with regulatory guidelines. As the investigation comes to a close, the financial community will be closely monitoring the outcome and potential fine faced by BNP Paribas, which could set a precedent for other institutions under similar scrutiny.