This article establishes a link between the economic sanctions imposed by the United States and the internal compliance procedures of non-American banks.  Scholars have recently examined one or the other of these issues, but have rarely established a connection between the two. At this time, we do not know of another study that offers a comprehensive perspective on the compliance of banks operating outside the United States, particularly European banks, while also taking into consideration the arsenal of American sanctions as well as the extraterritoriality problem.
David Restrepo, Matteo Winkler, U.S. Economic Sanctions and the Corporate Compliance of Foreign Banks, The International Lawyer, 2018.

3 questions for HEC professors Matteo Winkler and David Restrepo Amariles

What led you to examine American economic sanctions?

M.W.: I have been studying the extraterritoriality question for 13 years. It’s a fascinating subject because it’s at the crossroads of so many other issues: politics, international business, public and private law, public control over private transactions… David, an expert in numbers and data, and I wanted to understand the impact of American sanctions. In other words, how the United States uses its own law as an economic weapon of war.

D.R.: What interested me about this subject is the way American foreign policy, which is strictly regulated, affects corporate operations in other countries. So, we studied the impact of these measures on the organization and even the business cultures of non-American companies. I don’t know if this was the goal of these sanctions, but it’s certainly one of the effects.

You mention the Americanization of the banking system…

D.R.: Most sanctions targeting foreign banks end in an agreement negotiated with the head of the American Department of Justice (DoJ). This authority incites banks to follow approaches that reflect the American concept of bank management and makes them strengthen their compliance systems. European financial-sector companies had limited capacity to identify the signals of non-compliance and to deal with them internally.

M.W.: Some agreements go even further and demand that a supervisor appointed by the DoJ must oversee a company’s compliance team. This in-house “policeman”, paid by the bank, has access to all kinds of documents and e-mails. This person is more powerful than the board of directors and the CEO. Banks therefore end up adopting, at every level of their organization, norms and codes of conduct that are aligned with American practices.

Can’t European banks refuse this kind of interference?

D.R.: American banking enterprises, many of which have already been the subject of investigations, tend to favor conciliation, whereas some European banks try to resist, like BNP Paribas, for example. [Note: The bank had to pay a fine of almost 9 billion dollars in 2014.] The Americanization of compliance, which has been underway for less than a decade, is like a rehabilitation program: the more a company resists it, the higher the fines and the stricter the controls will be.

David Restrepo Amariles
Associate professor of tax, law and AI at HEC, he is director of research on SMART Law (Scientific, Mathematical, Algorithmic, Risk and Technology-driven law) at the DATA IA institute. His research focuses on the transformations of law and regulation in the global and digital society.

Matteo Winkler
Assistant professor of tax and law at HEC Paris, he has published widely on international human rights, LGBT issues, and international commercial arbitration. His very diverse research interests range from internet law to family law.

Published by