Unsafe practices Société Générale agreed to pay $1.3 billion to settle claims by U.S. and New York state authorities that it processed and concealed billions of dollars in transactions in countries under American sanctions, including Iran, Cuba, Libya and Sudan. The transactions took place between 2003 and 2013. The penalties are the second largest imposed on a bank for violating U.S. sanctions, second only to the $8.9 billion penalty levied against BNP Paribas in 2014. Wall Street Journal, Financial Times, American Banker
Going up John Williams, the president of the Federal Reserve Bank of New York, said he expects the Fed will continue to gradually raise interest rates. But Williams, who is also vice chairman of the Federal Open Market Committee, the Fed’s interest rate setting panel, “didn’t offer much in the way of specific guidance about the outlook for rates.”
Separately, Randal Quarles, the Fed’s vice chair for supervision, is set to become the head of the international Financial Stability Board. He will replace Bank of England Governor Mark Carney, whose term ends this year. Klaas Knot, president of the Dutch Central Bank, is expected to be named vice chair of the FSB.
Wall Street Journal
More are welcome Vanguard Group is lowering to $3,000 from $10,000 the minimum investment size on nearly 40 of its biggest index funds, “the latest salvo in its push to lure investors from rivals as asset managers come under pressure to slash the costs of funds.” The new minimums apply to the funds’ admiral shares, which carry lower fees than its regular investor classes. “The funds make up the majority of Vanguard’s index funds that are available to individual investors and include some of the industry’s largest stock and bond index funds.”
Financial Times
Whistleblower speaks The whistleblower in Danske Bank’s massive money laundering scandal told Denmark’s Parliament that as much as $150 billion of the more than $230 billion that was laundered through the bank’s tiny Estonian branch flowed through the “U.S. subsidiary of a European bank.” Howard Wilkinson declined to name the lender but it is understood to be Deutsche Bank. “The revelation leaves Deutsche Bank vulnerable as it is still being investigated by the U.S. Department of Justice for its own part in moving massive amounts of money out of Russia through dubious ‘mirror trades.'”
The paper presents an updated timeline of events in the Danske Bank scandal.
Elsewhere
Upheld The U.S. Circuit Court of Appeals in Manhattan ruled Barclays is not liable to investors who bought its U.S.-traded stock prior to the 2008 financial crisis. The court upheld the dismissal of claims against the British bank and the underwriters who sold $2.5 billion of American depositary shares for Barclays in April 2008.
Quotable
“I don’t want to be here. I think it’s pretty shocking that four-and-a-half years on I need to be here because this disgrace is still being investigated.” — Danske Bank whistleblower Howard Wilkinson, in his first public testimony before the Danish Parliament.
Gary Farro's testimony focused on both the banking activity of Michael Cohen, a former Trump attorney who paid $130,000 to an adult film actress in 2016, and First Republic Bank's due diligence work.
The combination of two Pacific Northwest banks was supposed to create a regional powerhouse, but rising deposit costs have stung. CEO Clint Stein says he's "laser-focused" on making Columbia a top performer again.
A set of panels discussing minority depository institutions and digitization found that cost is a significant challenge to minority depository institutions, especially in the core processing space.
The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency issued a 30-page guidebook on managing affiliate risks. The report builds on formal guidance issued last year.
The efforts, which respond to President Biden's October executive order on AI, aim to improve synthetic content detection and improve the trustworthiness of AI models.
Tighter merchant connections between Square and Cash App helped Block produce stronger-than-expected results during the first quarter, while Jack Dorsey said the firm will launch its first remittance product later this year leveraging decentralized finance.