As the Department of Justice continues to aggressively prosecute foreign banks, a meeting between the Obama administration and French officials this week could get explosive.

BNP Paribas

$10 billion fine significantly higher than that for repeat offender HSBC

According to a Bloomberg report, DoJ’s $10 billion fine against France’s largest bank is “stirring outrage in the country” which is putting pressure on French President Francois Hollande to “protect the bank from the American onslaught.”

The DoJ has charged numerous large foreign banks in serious criminal matters. Credit Suisse Group AG (ADR) (NYSE:CS) was recently forced to admit criminal guilt in a US tax evasion scam, where the Chicago Tribune called for individual prosecutions of those who broke the law.  Another Swiss bank, UBS AG (NYSE:UBS), faced similar a wrath. DoJ has yet to level criminal charges of the same ferocity against US banks. In a statement, the right-wing National Front political party accused the US of “racketeering” in attempting to beat down French competitors to US banks.

BNP is accused of transferring money in US sanctioned countries

In the BNP Paribas SA (EPA:BNP) case, the US DoJ is attempting to impose a fine to settle allegations BNP transferred funds in violation of bans against Sudan, Iran and Cuba, Bloomberg reported, citing people familiar with the investigation. The fine might be the largest criminal penalty in the US, the report noted. The last bank penalty was issued to UK’s HSBC Holdings plc (ADR) (NYSE:HSBC) (LON:HSBA), which admitted to repeat offenses for laundering money for  drug cartels in Mexico and Iran.  The fine for BNP Paribas SA (EPA:BNP) is ten times larger than the HSBC fine.

In France the central bank has stated the transactions in question did not violate French or European law. “Washington has the annoying habit of trying to apply its laws outside its jurisdiction and use its strength for commercial ends,” Jacques Myard, a lawmaker from Former President Nicolas Sarkozy’s UMP Party, was quoted as saying.

Odd bedfellows

It’s odd that Hollande was swept into office by describing financial powerhouses as “my real enemy” yet he is now in a position to defend the French bankers.  Until this point the Paris government has avoided direct involvement in the case, according to the report, saying it is a legal matter that should follow its own course. This could end if Hollande succumbs to French nationalist pressure and confronts Obama on the issue.

However, behind the scenes French officials are assisting the bank, according to Jean-Marie Le Guen, minister in charge of relations with parliament. “Megaphone diplomacy is not what’s called for here,” Le Guen said on BFM television. “The United States can’t treat its allies like this.”