* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

When huge fines are seen as "the cost of doing business", how do you punish banks that flout the law?

Late last month, the U.S. government proudly announced a deal to resolve charges against BNP Paribas, France’s largest bank, for its prodigious violations of U.S. financial sanctions against Sudan, Iran, Cuba, and Burma. The bank agreed to pay a massive $8.9 billion fine and temporarily give up its ability to handle certain transactions in U.S. dollars. Although the case is yet another wholly lacking in individual prosecutions, many hailed (and some bemoaned) the punishment as unprecedentedly heavy—a strong statement of American intent to hold banks accountable for wrongdoing and a fair price to pay for a bank that would surely suffer grave damage to its reputation as well. But mere weeks later, it seems that the severity and persistence of BNP’s misconduct is all but forgotten, while the bank’s customers and investors have already returned to business as usual.

The court documents from the case include some stark revelations. Between 2002 and 2012, BNP settled over $190 billion worth of transactions through its New York office for clients in Sudan, Iran, and Cuba, at one point providing over half of the banking services in use by the Sudanese government. Along with blanket sanctions on these countries, many of BNP’s clients were subject to further targeted sanctions putatively denying them access to the American financial system. BNP’s methods for concealing the transactions are alarmingly quotidian—the bank simply routed money first through its European offices, which removed identifying information from the transactions that could link the money back to the sanctioned countries, before passing it on to the U.S. For several years, this practice was actually a matter of official BNP policy. Even after U.S. authorities and the bank’s own lawyers informed BNP that their conduct was highly illegal, several of the bank’s offices nonetheless continued to routinely strip information from transactions rather than decline to process further dollar-denominated transactions for their sanctioned customers. Multiple emails from high-level executives show that their main concern at the time was not only to keep the transactions off U.S. authorities’ radar, but to keep BNP’s own compliance staff in the New York office in the dark as well.

Presumably, if the discovery that BNP preferred making profits to cutting ties with a genocidal regime or even just not processing their dollar transactions, or the discovery that its offices were in the habit of deliberately deceiving one another, had done any actual damage to the bank’s reputation, investors would have fled in droves. Instead, buoyed by BNP’s statements that it had sufficient capital to absorb the fine—and even continue paying dividends—and was unlikely to lose customers as a result of the dollar-clearing ban, the bank’s stock jumped over three percent on the day after the settlement was announced. This is consistent with past cases, such as HSBC and Standard Chartered, in which investors seem to care less about a bank’s involvement in illicit activity than the certainty of resolving allegations against it (and simply chalk up any fines assessed, however large, to the “cost of doing business”).

BNP should be in a particularly tenuous position, though, given that its largest individual shareholder is the government of Belgium, with a 10.4% share of BNP left over from its holdings acquired during the financial crisis. As a member of the Financial Transparency Coalition (for which my organization serves on the coordinating committee), Belgium has taken a principled stance against the use of the legitimate financial system to move illicit money on behalf of criminals and terrorists. Belgium’s finance minister has already called on BNP to explain its conduct and state whether it has “learned its lesson,” so to speak, but Belgium must imbue this conversation with potential consequences—including the possibility of immediate divestment, without regard to the financial consequences for BNP.

There is certainly precedent. Norway’s sovereign wealth fund has divested from numerous companies as a result of their involvement in weapons manufacturing, tobacco production, or environmental degradation. The Norwegian fund also placed Alstom under close watch after the company settled charges of gross corruption in Switzerland. Sovereign wealth funds in other countries, such as France and New Zealand, have taken similar stances. That Belgium holds BNP stock for financial stability reasons rather than mere investment should make no difference—and if the bank is able to absorb a $9 billion fine without cutting its dividend payout, it hardly needs further propping up anyway.

BNP’s willingness to entangle itself with a genocidal regime in Sudan and a terrorism-supporting regime in Iran should be reason enough for the Belgian government and other investors to reconsider their stakes in the bank. The bank’s practices of wantonly subverting basic transparency measures in global financial networks and deceiving even its own compliance officers, though, raise serious questions about the bank’s governance and should cause much greater concern to its investors. The theory that markets can assist in holding corrupt actors accountable is certainly reasonable—hopefully soon we will see some actual proof for it.

Joshua Simmons is a Policy Counsel at Global Financial Integrity, a non-partisan, non-profit research and advocacy organization based in Washington, DC.