BNP Paribas lacks USD clearing capabilities – impact on commodity trade David Gustin - October 16, 2014 3:23 AM | Categories: Risk Management, Trade & Commodity Finance | Tags: AML sanctions, USD clearing As part of BNP’s punishment for violating U.S. sanctions against Sudan, Cuba and Iran, in addition to being fined $8.9 billion, a New York banking regulator suspended the French bank from clearing transactions in energy trade finance for the whole of 2015. BNP has a huge energy franchise with over 200 front-office professionals in North America, London and Singapore serving the Bank's global client franchise for oil and oil products, base and precious metals, agricultural commodities, carbon and investor solutions. They help finance the production, the transformation and the marketing of various commodities such as energy and metals. The ban on USD clearing is a real blow. One thing that should be clarified is that the BNP restrictions only apply on its' energy business, and while that is significant, the press has made it out to be more than that. According to the press, three large U.S. banks have been approached to take over the clearing for the energy business, including Citibank, BAML, and JPMorgan. Given JPMorgan exited from the einvoicing business (Xign), for what I hear were mostly compliance concerns, these banks may be reluctant to clear for BNP Paribas because they could be opening themselves up to risk or the perception of risk which could hurt their reputations. According to one source, these banks may require lots of additional information BNP can’t or won’t provide. The bank continues to do innovative things around inventory finance for clients. BNP Paribas has a trading company in Ireland that ties into two wholly-owned subsidiaries, UTEXAM LOGISTICS and UTEXAM Solutions and focuses on inventory management for clients See – Stepping Out of the Box. I would imagine every cross border USD business is getting quite a lot of scrutiny at all banks. p.s. Stay in touch with TFM and receive our weekly digest by clicking here Related Articles KYC Audits may lead to Unbanked Countries, Unbanked Banks Commodity finance being done by Trading Houses BNP Paribas fine a wakeup call to Vendors, Supplier Networks… Discuss this: Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of new posts by email.