A recent news story reported that the U.S. Treasury Department’s financial crimes enforcement division had ordered a former fraud officer to pay $450,000 because he had allegedly failed to report suspected instances of money laundering. His former employee, U.S. Bank, was fined $613 million in 2018 for alleged weak oversight of suspected money laundering.
For some readers, this report may raise some questions. What actions make banks suspect money laundering? What are banks supposed to do if they suspect a customer of laundering illegally-acquired money?
First, let’s get the basics out of the way. The term “money laundering” refers to a variety of techniques in which individuals or businesses take money from criminal activity and transfer it into what appear to be legitimate areas. For instance, a drug trafficker might attempt to conceal his profits by depositing them into the accounts of a pizza parlor.
California and federal laws aim to prevent this type of behavior. Some of the first laws against money laundering were intended to fight organized crime and drug trafficking networks. Later, money laundering laws were designed to cut off funding for domestic and global terrorism.
One of the earliest of these federal laws was the Bank Secrecy Act. This requires financial institutions to report suspicious transactions, including those involving large amounts of cash. Several new federal laws passed in the 1980s and 1990s broadened the types of transactions that must raise red flags at banks. They also created new requirements for training and examination at financial institutions, so that fraud officers and other bank employees can be on the lookout for a broad range of suspicious transactions. These laws became even more strict with the passage of the Patriot Act in 2001. Under these laws, if banks see transactions that check the boxes for suspicious activity, they must report it to the relevant state or federal agencies.
Anti-money laundering laws regulate a wide variety of businesses in banking, consumer credit, insurance, securities and other industries, and they can involve a wide variety of alleged criminal activity. Defendants who have been accused of money laundering often also face other criminal charges.
Thus, money laundering charges are often part of a highly complex case involving multiple charges. When the charges involve securities fraud or other financial crimes, the evidence in these cases can be extremely complex. It can be hard for prosecutors to explain complex evidence to a jury, and sometimes it’s even harder to present a strong defense. It’s important for those who are facing charges related to money laundering to seek out help from an attorney with experience in financial crime defense.
