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US Department of Labor allows BNP Paribas to manage retirement funds

French banking group BNP Paribas can continue to manage US retirement funds, despite pleading guilty last year to violating US sanctions, the US Department of Labour has said. 16 Apr 2015

BNP Paribas had applied for an exemption from sanctions that were imposed after its guilty plea. In a filing published in the US Federal Register the department said it had asked "all interested parties" to submit comments on the proposed exemption, and had received one comment from BNP Paribas, and one from public interest group Public Citizen.

Public Citizen asked the department to reject BNP Paribas' application to deter future criminal misconduct.

"Public Citizen further asserted that convicted entities should not be permitted to engage in '[c]omplex or higher risk investments,' and that the lack of a criminal record should be a prerequisite to manage investments," the department said.

However, the department decided that the interests of plan participants would be better protected by stringent conditions put on BNP Paribas.

"It is unclear that the denial of the exemption application would have any meaningful effect on BNP's behaviour," it said.

The conditions imposed by the Department of Labor include the introduction of an independent auditor who will have "unconditional access to [BNP Paribas'] business, including, but not limited to: its computer systems, business records, transactional data, workplace locations, training materials, and personnel."

The department has "tightened the stringency of the audit conditions from the original proposal; and it has enhanced its ability to exercise oversight, if necessary," it said.

Public Citizen described the decision as "Alice-in-Wonderland logic". "The [Department of Labor] says that following its own rules wouldn’t affect BNP’s behavior, but granting a wavier would," the group's policy advocate Bartlett Naylor said in a statement.

Naylor did, however, "commend the [Department of Labor] for granting our request to improve the auditor requirements at BNP".