US turns closer scrutiny on banks in money laundering
The United States Treasury Department appears to be stepping up its crackdown on banking operations that -- knowingly or not -- are connected with money laundering. Earlier this week, the Treasury announced civil penalties of $2.25 million against Crocker National Bank in San Francisco, the nation's 11th largest bank, for failing to report cash transactions totaling $3.98 billion. It was the biggest fine ever assessed under the Bank Secrecy Act, under which a bank must report all cash transactions exceeding $10,000 dollars.
Meanwhile, federal investigators are said to be preparing to indict three or four Boston banks for failing to report big cash transactions. Last February, the Bank of Boston agreed to pay a $500,000 penalty for similar violations in connection with $1.22 billion in cash transactions between the US and Europe.
The Treasury now appears to be making direct connections between banking irregularities and criminal activities.
Treasury official John M. Walker Jr. said there was reason to believe some of the money deposited in Crocker branches on the Mexican border came from drug dealing. Crocker officials took strong exception to the charges, arguing that the problems were of a technical nature.
Behind the fines is an ongoing federal effort to root out money laundering. Banks often are unwitting conduits for such operations.
Typically, cash from criminal activities -- such as street sales of drugs -- is converted into travelers checks, money orders, or telegraphic transfers at a bank and sent to a country that does not share transaction information with the US. The money then either goes back into illegal activities or is used to make a ``loan'' to a US front operation.
Until the federal crackdown, bankers had been rather lax in their reporting of cash transactions, fearing that they might otherwise be invading the privacy of customers or discouraging deposits from legitimate cash-intensive businesses such as groceries or racetracks.