Bank of Boston reassures shareholders
Officials of Bank of Boston -- which found itself embroiled in a currency-reporting controversy last month -- Thursday assured shareholders the bank was not involved in money laundering or other illegal activities. Despite the presence of some dissidents, most shareholders at the bank's annual meeting seemed to buy that. And for investors, the bank had good news: It earned $164.1 million in 1984, up 21 percent from 1983. Earnings per share were up 13 percent, from $7.40 to $8.35. The bank was aided by a nonrecurring profit from the sale of its headquarters building.
``Nothing I've seen has changed my mind'' about the quality of the bank, said shareholder James Kane of Bridgewater, Mass., who has held Bank of Boston stock for more than 20 years. ``These things happen from time to time.''
That seemed to be the general attitude of shareholders, although one did present bank chairman William Brown with a laundry bag and several commented critically on the bank's failure to report currency transactions -- a failure which cost the bank $500,000 in fines.
Mr. Brown reiterated to shareholders that there were two separate problems: One involved international money transactions; the other, cash deposits from individuals. Brown also noted that since the first reported mistakes, the bank has discovered 1,200 more international transactions, amounting to $110 million, which it reported yesterday.
The bank's currency reporting woes have caused auditors at many other banks to reexamine their books with an eagle eye. In the past week, a number of major banks have announced that they, too, had failed to fully comply with federal bank reporting laws.
The Bank Secrecy Act requires financial institutions to report all currency transactions over $10,000 to the Internal Revenue Service. The purpose of the act is to trace money laundering by organized crime and drug dealers. The requirement to report international transactions was added to the Bank Secrecy Act in 1980. It's this update that Bank of Boston officials said they failed to note.
Irving Trust Company, Manufacturers Hanover Trust, Chemical Bank, Bank of America, and First National of Chicago all noted problems. As in the Bank of Boston case, officials at these banks maintain the errors were unintentional, due to administrative foul-ups.
Said Bank of Boston chairman Brown, ``As more and more [banks] report, they [federal authorities] seem to get more lenient about what's happening.''
A Treasury spokesman told the Monitor, however, that the fact that banks are reporting these mistakes ``does not lessen the seriousness of the problem,'' noting that although there may be ``systems problems'' at these banks ``you'd have to look at each bank to see where the failure was.'' Several other major banks say they have conducted thorough internal investigations and have found no currency-law violations.