The Department of Justice is shifting its sights to a new offensive in combating money laundering: bringing criminal charges against banks and other financial institutions for weak compliance systems that fail to catch illicit money flows.
Even while the department’s money-laundering unit is wrapping up a series of blockbuster cases involving sanctions-busting transactions routed through some of Europe’s biggest banks, it has set its sights on the next front.
While the sanctions cases involving Iran and other countries have largely dealt with historical conduct, part of the shift is to pursue ongoing misconduct.
The focus on compliance systems has traditionally been left to financial firms’ direct regulators, including the Office of the Comptroller of the Currency, whose punishments usually amount to a strong slap on the wrist.
The DOJ has brought a handful of its own such cases, including one against Wachovia in 2010 in which authorities said the bank failed to maintain effective anti-money laundering controls and did not stop more than $100 million of Colombian and Mexican drug traffickers’ money from being laundered through accounts at the bank.
The DOJ unit is now interested in ramping up the number of criminal cases it brings under the Bank Secrecy Act, or BSA, a law that requires financial institutions and their employees to take steps to combat money laundering.
“I think you are going to see more complex BSA cases against banks, I think you are going to see enforcement across the broader spectrum of financial institutions,” said Jennifer Shasky Calvery, who heads the Department of Justice’s Asset Forfeiture and Money Laundering Section.
Detailed news link ( © Reuters): click here