Page 5 - White-Collar Crime

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White-Collar Crime | MONDAY, SEPTEMBER 29, 2014 | S5

tory compliance programs serving as the to §5318(h)’s AML program requirements. U.S. attorney ofices around the country, initi- individuals for failure to have an effective AML

front line of AML prevention and detection.
In each of these cases, the programmatic ated a number of prosecutions for willful fail- program, thereby continuing the evolution of
failures resulted in the inancial institution ure to have an effective AML program against the BSA from a little-enforced record-keeping
Criminal Enforcement of the BSA
becoming a vehicle for moving dirty money, an array of inancial institutions of different statute for institutions into a powerful crimi-
such as drug money. These actions, with rare sizes and types. These prosecutions ranged nal enforcement tool capable of reaching a
Not long after the passage of the PATRI- exception, resulted in deferred prosecution from small banks such as CommunityOne in wide range of targets, including individuals.20
OT Act, the irst case to criminally charge a agreements and ines that ranged from $4 North Carolina, whose BSA programmatic The rising tide of BSA criminal prosecu-
inancial institution for failure to maintain an million to $500 million.
failures enabled the successful continuation tions has rapidly spread across the country.
effective AML program was brought against While the irst several years of enforce- of a Ponzi scheme, to large banks, such as For example, the Southern District of New
Broadway National Bank.Due to a largely ment brought a steady stream, since 2011, HSBC Bank USA, whose BSA failures enabled York’s recent $1.7 billion settlement with JP
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non-existent AML program, Broadway failed there has been an explosion in enforcement hundreds of millions of dollars to low from Morgan Chase was predicated on a BSA fail-
to report suspicious transactions exceeding against inancial institutions for failure to have Mexico into the United States.18 Similarly, ure to have an effective AML program. The
over $120 million in cash belonging to several an effective AML program, and enforcement MLIBU continued increased enforcement case sought to establish JP Morgan Chase’s
drug traficking organizations. Even minimal has begun to move beyond traditional banks.
against money services businesses, whose
AML failures as the cause for it becoming
diligence would have revealed that the small the primary bank for Bernard Madoff’s Ponzi
businesses depositing the cash could not scheme. Similarly, and as a signal to non-bank
have generated such large sums of money. inancial institutions of what may be to come,
Broadway eventually pleaded guilty to failure the Central District of California turned its The PATRIOT Act, enacted shortly after the events of Sept. 11, 2001,

to have an effective AML program, failure to sights on the casino industry for BSA vio- completed the BSA’s evolution into a full programmatic statute
ile SARs, and structuring deposits to avoid lations and entered into a non-prosecution
the reporting requirements.16
agreement with the Las Vegas Sands Corpo- and set the stage for the BSA’s anti-money laundering program re-
After the success of Broadway, the U.S. ration for failure to detect suspicious activ- quirements to become a main focus of criminal prosecution.
Department of Justice (DOJ) began to view the ity and ile SARs relating to its high-dollar
BSA as more than merely a reporting violation gamblers at its Venetian Palazzo Hotel in Las
statute, but rather as means to impose broad Vegas.21 All told, in the three-year period rang-
programmatic change within an institution ing from 2011 to 2014, 10 BSA prosecutions This increased enforcement is attributable breadth and popularity continued to expand.
aimed at preventing the institution from being for failure to have an effective AML program in part to the 2010 formation of the Money For example, prosecutions for AML program

a conduit for criminal proceeds in the irst have been initiated, with associated criminal Laundering and Bank Integrity Unit (MLBIU) failures were brought against MoneyGram,
instance. From 2002 through 2010, the DOJ penalties as high as the $1.7 billion JP Morgan within the Asset Forfeiture and Money Laun- which had become a conduit for various fraud
brought a steady stream of criminal actions Chase settlement.22
dering Section of the DOJ’s Criminal Division. schemes, including schemes to defraud the
against banks and money service businesses This increased focus on BSA AML enforce- MLBIU was the DOJ’s irst effort dedicated elderly,19 as well as small check-cashing insti-
for willful failures to implement and main- ment extends beyond the DOJ. New York’s speciically to the criminal enforcement of tutions whose failures provided an avenue for
tain effective AML programs.17 Money service Department of Financial Services has been the BSA and the investigation and prosecu- health care fraudsters to turn their proceeds
businesses are a type of inancial institution extremely active in the inancial institution tion of willful failures to have an effective into cash. The check-cashing cases also repre-
that, until the PATRIOT Act, was not subject
enforcement arena as evidenced » AML program. MLBIU, partnering with local
sented the irst criminal prosecution against
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