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Global Banks on Trial: U.S. Prosecutions and the Remaking of International Finance
In the years since the 2008 financial crisis, U.S. federal prosecutors have brought dozens of criminal cases against the world's most powerful banks, charging them with manipulating financial indices, helping their customers evade taxes, evading sanctions, and laundering money. To settle these cases, global banks like UBS, Barclays, HSBC and BNP Paribas paid tens of billions of dollars in fines. They also agreed to extensive reforms, hiring hundreds of compliance officers, spending billions on new systems, and installing independent monitors. In effect, they agreed to become worldwide enforcers of U.S. law, including financial sanctions-sometimes despite their own governments' protests.
This book examines the U.S. enforcement campaign against global banks across four areas: benchmark manipulation, tax evasion, sanctions violations, and sovereign debt. It shows that U.S. prosecutors have unilaterally carved out a new role as global bank regulators, heralding a fundamental shift in how international finance is overseen. Their ability to do so stems from U.S. control over access to vital hubs of the international financial system. In some areas, unilateral U.S. actions have ushered in important multilateral reforms, such as the rise of automatic tax information exchange and better-regulated financial indices. In other areas, such as financial sanctions, unilateralism has attracted protests from other states and spurred attempts to challenge U.S. dominance of international finance.
This book examines the U.S. enforcement campaign against global banks across four areas: benchmark manipulation, tax evasion, sanctions violations, and sovereign debt. It shows that U.S. prosecutors have unilaterally carved out a new role as global bank regulators, heralding a fundamental shift in how international finance is overseen. Their ability to do so stems from U.S. control over access to vital hubs of the international financial system. In some areas, unilateral U.S. actions have ushered in important multilateral reforms, such as the rise of automatic tax information exchange and better-regulated financial indices. In other areas, such as financial sanctions, unilateralism has attracted protests from other states and spurred attempts to challenge U.S. dominance of international finance.
280 pages, Hardcover
Published March 16, 2020
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March 18, 2021
The book covers U.S. enforcement actions and impacts on international finance in four domains (1) Benchmark Manipulation, (2) Offshore Tax Evasion, (3) Sanctions Evasion, and (4) Sovereign Debt Enforcement. These chapters provide comprehensive details with cases involving global banks (e.g. Barlays, Citigroup, Deutsche, UBS) relating to LIBOR and foreign exchange rate manipulations; Swiss banks (Credit Suisse, UBS) with undeclared US clients evading tax under the Swiss secrecy law; global banks (e.g. BNP, HSBC) evading U.S. financial sanctions on countries like Iran & Russia; and Argentina's 2001 sovereign debt default on holdout bondholders. In these cases, U.S. took assertion of it's unilateral authority via federal prosecutions made from the DOJ and district attorney's office; adoption of federal law like FATCA; and choking off access to US payment system.
The author also shared insight into the objectivity of the US unilateral actions of the four kinds of international finance cases ... For the benchmark manipulation and tax evasion, other states enjoyed some benefits as a result (e.g. UK and EU adopted new benchmark regulation with FSB developed new international standards; multilateral system of automatic information exchange on overseas bank accounts like CRS). While for sanctions evasion and sovereign debt, the leverage of international financial infrastructure against target countries also induce loss to other states and non US banks, which brought the exploration of alternative international financial infrastructures (e.g. INSTEX of EU, CIPS of China) and alternative payment settlement currency (e.g. renminbi, cryptocurrency).
The author also shared insight into the objectivity of the US unilateral actions of the four kinds of international finance cases ... For the benchmark manipulation and tax evasion, other states enjoyed some benefits as a result (e.g. UK and EU adopted new benchmark regulation with FSB developed new international standards; multilateral system of automatic information exchange on overseas bank accounts like CRS). While for sanctions evasion and sovereign debt, the leverage of international financial infrastructure against target countries also induce loss to other states and non US banks, which brought the exploration of alternative international financial infrastructures (e.g. INSTEX of EU, CIPS of China) and alternative payment settlement currency (e.g. renminbi, cryptocurrency).
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