Report: U.S. banks subject of money-laundering probe


NEW YORK (AP) — Regulators are investigating whether
several major U.S. banks failed to monitor transactions properly,
allowing criminals to launder money, according to a New York Times
story. The newspaper cited officials who it said spoke on the condition
of anonymity.
The Office of the Comptroller of the Currency, the
federal agency that oversees the biggest banks, is leading the
money-laundering investigation, according to the Times. The report said
the OCC could soon take action against JPMorgan Chase & Co., and
that it is also investigating Bank of America Corp. Money laundering
allows people to make money — often obtained illegally — appear like it
came from another source.
The OCC, JPMorgan and Bank of America declined to comment.
financial industry is struggling to mend its public image. Four years
after the financial crisis, banks are getting closer scrutiny. And
regulators are under pressure to show that they’re not missing any
questionable activity.
This summer, British bank Barclays PLC
settled charges that it had manipulated a key global interest rate.
Standard Chartered PLC, also based in the U.K., agreed to settle charges
that it had improperly processed money for Iran, brought by the New
York Department of Financial Services after the bank voluntarily
informed regulators that it was reviewing relevant practices. In the
spring, JPMorgan surprised shareholders with an unexpected trading loss.
the OCC takes action, it could be similar to a cease-and-desist order
that it filed against Citigroup in April. At the time, the OCC said that
Citi had deficient internal controls and anti-money laundering
procedures. In bank regulation, a cease-and-desist order doesn’t mean
that a bank has to shut down, but it is a serious sanction that requires
a bank to change its practices. Citi had already told the regulator
that from 2006 to 2010, it had "failed to adequately monitor" some of
its transactions connected to "foreign correspondent banking."
order in April didn’t make any new, specific accusations. But it did
instruct Citigroup to tighten its rules so it could improve compliance
with the Bank Secrecy Act and related regulations. The act requires
financial institutions to report suspicious activity and to put rules in
place to try to make money laundering impossible for customers.
year, JPMorgan paid $88 million to settle charges from the Treasury
that it had unlawfully processed money for Cuba, Iran, Sudan and
At the time, JPMorgan said it had had no intent to
violate regulations. It pointed out that it oversaw "hundreds of
millions of transactions and customer records per day, and annual error
rates are a tiny fraction of a percent."
It’s not expected that
banks would be accused of trying to show support for countries like Cuba
and Iran. It’s more likely that they would be accused of faulty
oversight that made any unlawful transactions possible.
The industry
has maintained that such violations are almost always unintentional.
to the Times, the Justice Department and the Manhattan district
attorney’s office are also involved. The Manhattan U.S. attorney’s
office and the Manhattan district attorney’s office declined to comment.
Copyright 2012 The Associated Press.

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