Thisisn't the first time UBS has had to seek permission to keepmanaging money for U.S. retirees. The Swiss institution was one ofseveral U.S. and foreign banks that were forced to apply forsimilar waivers following convictions in 2016.(Photo:Bloomberg)

(Bloomberg) –The U.S. Labor Department is granting UBS Group AGpermission to continue managing U.S. pensions unhindered for oneyear despite a new criminal conviction in France, while cautioningthe Swiss banking giant that a future conviction anywhere in theworld could jeopardize that status.

The regulator issued its warning Tuesday after a French courtconvicted UBS this month of helping French citizens stash funds inundeclared Swiss accounts. The court ordered the bank to pay morethan 4.5 billion euros ($5.12 billion).

Like all parties that manage pensions overseen by the LaborDepartment, UBS must obtain a waiver to continue those operationsuninterrupted after certain criminal convictions, regardless ofwhere they occur. UBS oversees $11.5 billion in U.S. pensions aspart of $781 billion in assets under management globally, accordingto the bank.

“The department cautions that the relief in this exemption willterminate immediately if an entity within the UBS corporatestructure” is found guilty of any crime outlined in LaborDepartment regulations, the regulator warned.

UBS remains focused on serving the needs of its pension planclients, according to Peter Stack, a spokesman. UBS has previouslysaid the French court didn't address most of the bank's argumentsand called its ruling “inconsistent and contradictory.”

The Labor Department didn't immediately respond to requests forcomment.

The UBS exemption goes into effect from the date of the judgmentin the French First Instance Court against UBS, UBS France or both,according to a summary published in the Federal Register.

Although the Labor Department granted UBS's request to continueoperating as a so-called Qualified Professional Asset Manager, orQPAM, it rejected other elements of the bank's application.

For example, it denied UBS's request to exhaust all avenues ofappeal in France before being considered convicted. Regulators alsorebuffed UBS's request to delay telling its pension and IndividualRetirement Account customers why it had to apply for theexemption.

This isn't the first time UBS has had to seek permission to keepmanaging money for U.S. retirees. The Swiss institution was one ofseveral U.S. and foreign banks that were forced to apply forsimilar waivers following convictions in 2016.

The Labor Department's latest announcement follows its rejectionin December of BNP Paribas SA's application for a similar wavier.That rare rejection is expected to make it more difficult for theFrench bank to manage Americans' pension assets. The effect may belimited, though, because BNP Paribas is a minor player among U.S.retirement managers, with only about $1 billion in pensionassets.

Regulatory waivers have become politically fraught in recentyears, with lawmakers, including Senator Elizabeth Warren, aMassachusetts Democrat and presidential candidate, andRepresentative Maxine Waters of California, who now chairs theHouse Financial Services Committee, having called for tougherreviews of banks accused of crimes.

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