Tuesday, November 30, 2004

Money Laundering Problems at Bank of New York

A report in the Wall Street Journal (Nov. 30) indicates that the Bank of New York is negotiating to avoid an indictment for failing to report suspicious activity by a customer.  The Bank was at the center of the widely-report Russian mafia money-laundering scandal in the mid-1990s that was reputed to involve billions of dollars.  Among other things, Bank of New York promised to comply with all money laundering laws in order to avoid a criminal charge, so this case will be a significant embarrassment to its internal controls in the area of customer monitoring for potential money laundering.  The case also may provide an example of how the Department of Justice will apply its Principles of Federal Prosecution of Business Organizations.  According to the article, the Bank will pay a $24 million penalty, and the scope of its cooperation will likely be reviewed by corporate counsel to determine how it demonstrated its cooperation with prosecutors to avoid an indictment. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2004/11/money_launderin_1.html

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