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September 25, 2017

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BNP, tax evasion: Washington still dictates its economic law

WASHINGTON--Although its diplomatic clout is compromised on several fronts, the United States still dictates its economic law around the globe and has even expanded its reach, at the risk of raising hackles.

The case of BNP Paribas is the most spectacular evidence of the trend.

After lengthy negotiations, France's largest bank agreed to pay US$8.9 billion and pleaded guilty to moving billions of dollars through the U.S. financial system on behalf of Cuba, Iran, Myanmar and Sudan, all blacklisted by US economic sanctions.

The use of the dollar alone allowed U.S. authorities the right to order a criminal guilty plea and the record penalty on a foreign bank, a source of friction with French officials.

Former French Prime Minister Michel Rocard railed against "abuse of power" in an op-ed article in Le Monde newspaper, accusing the U.S. of a kind of economic "occupation" based on the extraterritoriality of its laws.

"The sanctions regulations have been enforced more and more aggressively in the past 10 years and their use has been broadened from a response to 9/11 to a larger tool of foreign policy," Farhad Alavi, a Washington-based lawyer specialized in sanctions, said in an interview.


Another issue has eyebrows furled. Since the beginning of July, when a sweeping U.S. law against tax evasion took effect, Washington has the right to demand the data of tens of thousands of accounts held by Americans in foreign banks.

Some 70 countries have signed treaties or agreed to cooperate with the U.S. on the Foreign Account Tax Compliance Act (FATCA), but the tax evasion offensive has also been criticized for unilateralism.

"It's not fabulous, unilateralism," admitted Pascal Saint-Amans, a staunch supporter of FATCA who heads the unit fighting tax havens at the Organisation for Economic Co-operation and Development.

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