Money laundering is a serious crime, which is vigorously prosecuted by federal authorities. Money laundering occurs when a person or an organization hides or disguises the profits of criminal activity, or funds destined to fund criminal activity, to make it appear that the funds are legitimate.
Recently, federal prosecutors have also gone after banks that are accused of being complicit in money laundering by criminal groups, by failing to adequately structure their operations so as to be able to effectively detect and report money laundering.
U.S. banks are expected to have an effectively functioning AML compliance function, and are expected to implement an anti-money laundering program that can effectively monitor suspicious transactions and activities, including from any international branches or affiliates of the bank. Further, the bank must be aware if there is a particular money laundering risk from a specific country, and its program must account for that and devote additional scrutiny to high-risk countries.
One of the signs of money laundering banks are expected to notice are large purchases of U.S. banknotes from foreign affiliates. Such purchases may indicate that a large amount of funds is being converted into U.S. cash, which is a red flag for money laundering. Frequent, large cash deposits are also signs of potential money laundering activity.
A banks failure to develop a program for detecting and stopping money laundering can result in criminal liability for the bank, and even charged as a co-conspirator
Another issue that banks need to be vigilant about in structuring their compliance programs is monitoring and stopping OFAC-prohibited transactions, which may include the transfer or funds to and from prohibited countries. When a bank deliberately colludes with such prohibited transfer by agreeing to omit information that identifies the countries from payments being sent, the potential exposure to criminal liability is even greater.
Whether the issue is money laundering, OFAC sanctions, or tax evasion, U.S. authorities are stepping up enforcement on banks that, whether through lack of due diligence or through deliberate misconduct, facilitate criminal financial transactions.
When the target of prosecution is a large entity such as a bank, which is subject to myriad regulations, reporting requirements, and compliance programs, the issues involved are highly complex. In some cases, individual criminal charges may also be filed against certain employees of the bank.
If you are an executive at a financial institution, and you or your institution is facing investigation for facilitating money laundering or other criminal activities, your first step should be to consult a reputable white collar defense attorney with a high level of expertise in financial issues and with both domestic and international experience.
Call our experienced NYC white collar defense attorneys at (212) 577-6677 to schedule an immediate consultation.