The Justice Department said that the bank helped to hide $20 billion in taxable revenue by not filing IRS Form 1099 information. UBS executives knew that the bank was violating U.S. law but refused to stop because “the business was too profitable to give up,” said R. Alexander Acosta, a U.S. attorney for the Southern District of Florida, in a statement. “This was not a mere compliance oversight, but rather a knowing crime motivated by greed.”

Between 2002 and 2007, UBS generated approximately $200 million in profits per year from their cross-border business with U.S. clients, according to the deferred prosecution agreement.

To help disguise money movements, bank employees used “counter surveillance techniques,” including nominee entities, encrypted laptops and numbered accounts, according to the Justice Department. UBS actively solicited the business by claiming Swiss secrecy was impenetrable even as executives openly referred to the revenue as “toxic waste,” a reference to its illegality, the department said.

In December 2002, a UBS official instructed bankers not to record any unauthorized contact with U.S. clients in the bank’s internal computer systems, the Justice Department said. In July 2004, the bank disclosed to the IRS that its U.S. operations had failed to file required paperwork and withhold taxes but made no mention of the bank’s cross-border business, according to court documents.

The fine is part of a deferred prosecution agreement with the U.S. Justice Department and the District Attorney of New York County to settle charges that the bank’s branches in London and Dubai falsified and omitted data on wire transfers from clients in sanctioned countries in order to hide their identity from correspondent banks in the United States.

As a result of its examination findings, the OCC issued a second Cease and Desist Order, by consent, to the Branch on February 29, 2008. It required the Branch to, among other things: cease and desist from processing wire transfers, dollar drafts, and pouch transactions; retain the services of a qualified, independent consultant to conduct a fourteen-month review (from January 1, 2007 through February 29, 2008) of the Branch's wire transfer and dollar draft activities to ascertain the existence of any unusual or suspicious transactions during this period; revise and implement the Branch's written program establishing a system of internal controls and processes; and to take other needed steps to ensure compliance with the suspicious activity reporting requirements under the law.

The OCC assessed the Branch a $15 million civil money penalty and imposed a new C&D Order as a direct result of the Branch's failure to comply with the OCC's 2007 C&D Order and the Branch's failure to correct these BSA program deficiencies.

In assessing a $15 million civil money penalty, FinCEN determined that the Branch failed to implement an adequate anti-money laundering program reasonably designed to identify and report transactions that exhibited indicia of money laundering or other suspicious activity involving approximately $197 million in suspicious transactions.

Specifically, on multiple occasions over an extended period of time, 47 agents assisted customers in the structuring of transactions represented to be drug trafficking proceeds to avoid the currency transaction reporting requirements of the Bank Secrecy Act. Sigue's failure to implement effective internal controls, training or independent testing to manage the risk of money laundering was serious, longstanding and systemic.

"Principals of money services businesses must exercise effective oversight and control over the authorization, transactional activity and operations of their agents to ensure compliance with the BSA and prevent money laundering. Operations with sound programs minimize the risk of being misused by criminals and unscrupulous or non-compliant agents," said James H. Freis, Jr., Director of the Financial Crimes Enforcement Network.

In particular, FinCEN found that Sigue's transaction monitoring system was not commensurate with the volume, dollar amounts and geographical reach of transactions processed by the money services business, resulting in the filing of incomplete and/or inaccurate suspicious activity reports. This occurred despite the repeated patterns of suspicious activity by identical or similar customers, beneficiaries and agents.

This represents the first major penalty for a MSB.

USD $15 million civil forfeiture

Deferred Prosecution

OCC/FinCEN

USD $10 million concurrent civil money penalty

Travel Services Unit, Salt Lake - failing to file accurate and timely SARs.

This is the largest forfeiture to date.

USD $10 civil money penalty

Deferred Prosecution

The bank failed to investigate the activity of three of its money services business (MSB) and thereby allowed the transactions to occur despite knowing that those particular customers were being investigated by authorities.

The Financial Crimes Enforcement Network (FinCEN), Federal Deposit Insurance Corporation (FDIC), and the New York State Banking Department (NYSBD)

Bank of America admitted that it failed to verify the information supplied to its Manhattan offices by some of its South American money services customers.

2) The Bank’s process for monitoring transaction activity was informal, decentralized and lacked documentation to track and monitor customer activity.

Failure to have an effective AML Program

"BankAtlantic willfully and knowingly ignored its obligations under the Bank Secrecy Act and anti-money laundering requirements for years."

USD $10 million was received from Undercover Operations of the US Government

Tonkawa Tribe of Oklahoma

The actions represent the first enforcement actions against an individual and a tribe for violations under the casino provisions of the Bank Secrecy Act (BSA).

As a result of the deficiencies in its anti-money laundering program, Oppenheimer also failed to properly identify and report transactions that were suspicious within the meaning of the Bank Secrecy Act regulations

Regulators determined that the bank maintained unsafe and unsound practices and failed to identify, assess and report suspicious activity

Violation of U.S. OFAC sanction laws

Staff failed to monitor the volume of transactions and cash flows

Staff was poorly trained in Bank Secrecy Act (BSA) compliance requirements

New York District Attorney's Office

Failure to file SARs

EDNY Case - Escrow Fraud Scheme

SDNY Case - Russian Money Movements

A former officer at the Bank of New York and her husband admitted conspiring to use the bank to launder more than $7 billion from Russia (purportedly the proceeds of illegal crime generated by the Russian Mafia)

An independent examiner was appointed.

USD $26 million combined forfeiture

USD $12 million restitution to victims of fraud

Non-Prosecution Agreement

Inadequate money laundering controls

Failure to manage risks associated with Politically Exposed Persons (PEPs)

Failure to file suspicious activity reports

Failure to designate a BSA compliance officer

From 1995 to 2004, Banco de Chile's New York and Miami branches opened banking and investment accounts, arranged international wire transfers and provided other banking services to Pinochet, and his family, including processing cashier's checks received from Riggs Bank through its concentration account. The bank maintained numerous accounts and certificates of deposit on behalf of Pinochet, his family and third parties that were primarily offshore corporations controlled by a Chilean attorney who forwarded proceeds as needed to Pinochet.

The bank's New York branch conducted a large volume of wire transfers on behalf of other banks seeking to transfer funds to the Middle East, particularly into the Palestinian territories. Two of the organizations for which the bank facilitated transfers were the Holy Land Foundation for Relief and Development and the charity known as the Global Relief Foundations, both of which Treasury has
identified as supportive of terrorist organizations. In fact, the former organization was cited by Treasury as a front for Hamas, the Palestinian terrorist group. In all, Arab Bank reportedly was involved in the transfer of over $20 million to over 45 suspected
terrorists or terrorist groups.
 

Through a consent agreement with the OCC, the bank agreed not to conduct or receive any further transfers or deposits at its US branch. The OCC and FinCEN levied the $24 million fine for “unsafe
and unsound” practices constituting breaches of the BSA.

Inadequate procedures to detect and report suspicious activity in accordance with the Bank Secrecy Act

Employees displayed a general lack of knowledge about certain types of high-risk activity at the bank.

The bank, had many international accounts that were considered higher risk, such as casas de cambio, bearer share entities, and accounts with large
volumes of international wire and pouch activity.

The bank lacked basic information with respect to these high risk accounts, including the identification of principals, type of business, source of funds, expected activity levels, financial statements, and distinction of the largest customer relationships.

The bank did not conduct due diligence on these high risk accounts and did not implement even minimum measures to identify and manage the risk of money laundering or other non-compliance with the Bank Secrecy Act. For example, Gulf failed to identify the actual owners and/or signatories on bearer share accounts based in the British Virgin Islands. Further, they opened bearer share accounts for two entities incorporated in an offshore jurisdiction without understanding the nature of a bearer share company.

Failure to file or timely file 2,434 CTRs and 47 SARs over a 3 year period and failed to file any CTRs for at least 32 months

When Gulf became aware of suspicious activity, it failed to review and analyze the information.  Gulf further failed to follow up on reports from the external auditors identifying three other accounts with inappropriate levels of cash activity, even when the bank received law enforcement subpoenas regarding the accounts.

FinCEN determined that these violations were “willful”, in that Gulf's BSA deficiencies were serious, ongoing, and systemic and it
had been on notice of prior BSA deficiencies through multiple examinations and the previous Cease and Desist Order, but still
failed to correct its policies

Securities and Exchange Board of India against UBS directing the company to establish higher standards of customer due diligence.

Failure to conduct Enhanced Due Diligence

The regulators are not accusing the bank of hiding or destroying pertinent emails, but of not disclosing that it could not locate or restore emails requested.

J.P. Morgan has agreed to pay the fine, but has not admitted wrongdoing in the matter.

Failure to implement a Customer Identification Program

Japan's Financial Services Agency found the bank's Japan branch failed to meet customer identification and suspicious transaction reporting requirements.

Bank was deficient in three out of the four Fed exam areas– AmSouth’s AML program had deficient internal controls, its staff lacked sufficient training, and the independent audits were inadequate.

AmSouth had failed to establish an adequate AML program by the deadline date

AML program lacked adequate management oversight.

Amsouth failed to conduct a risk assessment of its customer base and implement policies and procedures necessary to provide for appropriate due diligence and the capture of suspicious activities.

The result, according to the regulators, was a fragmented AML program in which particular areas of the bank had information regarding suspicious activity that they did not communicate to the BSA compliance group.

The regulators also found deficiencies in the bank's AML training. Business units were not trained on the types of activity that
warranted SAR reporting and employees misunderstood these BSA obligations – believing, for example, that they were only
obligated to file a SAR when the bank incurred a loss.

As to audit functions, the regulators found that the company's first post-PATRIOT Act AML audit in 2003 was incomplete and limited to only a “completeness check” of the SARs that were filed. Further, the bank's audit did not review detection and monitoring reports, sample and test suspicious accounts, or evaluate monitoring parameters as required.

The bank also failed to respond accurately to government requests for information under Section 314(a) of the PATRIOT Act.

Outside counsel was said to have made misleading statements to law enforcement

FinCEN also reported that the AmSouth Bank had numerous reporting violations, stating that the bank was “willfully blind” to its lack of internal controls.

USD $40 million civil forfeiture

Deferred Prosecution

Contraventions of the Securities and Exchange Law

The bank lacked effective
controls against money laundering, cheated customers on
banking products, made bogus loans, and had poor customer
identification procedures.

Japan's Financial Services Agency

The Financial Services Authority (FSA) claimed that although the bank was aware of the transactions, it failed to identify them as suspicious.

The bank also did not check that its staff understood fully their anti-money laundering responsibilities.

USD $672,000 fine

UBS employees intentionally concealed these acts from the Fed

Repeated breaches of UBS’s contractual obligations by conducting U.S. banknote transactions violating trade sanctions with Iran, Libya, Cuba and Yugoslavia in the course of its business relationship with the Federal Reserve Bank of New York

May 2004

Riggs Bank
Washington, DC

Riggs Bank specialized in private and diplomatic banking, including providing banking services for most foreign embassies in the District of Columbia.  As a result, Riggs facilitated private bank accounts for certain politically exposed persons (PEPs) or senior foreign political figures (SFPFs).

Failure to file or delayed filing of 33 suspicious activity reports on funds transfers representing over $98 million through accounts maintained for embassy officials and political leaders of Saudi Arabia and Equatorial Guinea.  Regulators later uncovered an additional 61 delayed filings over a 4 year period.

Riggs had also failed to report suspicious transactions with respect to its accounts for former Chilean dictator Augusto Pinochet (another PEP) over an eight-year period ending in 2002, even though it was aware of an October 1998 attachment order by a Spanish magistrate issued against all bank accounts held by Pinochet, his family members, or third parties in any country.

The bank also generally failed to collect or maintain sufficient information (EDD) about its foreign private banking customers in contravention of Section 312 of the PATRIOT Act and related Treasury guidance, which requires enhanced scrutiny (monitoring) of private banking accounts maintained for senior foreign political figures, their family members, or close associates.

Riggs failed to properly supervise the bank's relationship manager for the Equatorial Guinea accounts; indeed, it was unaware that he had signature authority over two of the country's accounts.

Riggs' internal controls did not effectively identify or address the BSA-related risks either within various bank divisions or as applied to particular customers, products, services, or accounts.

The bank's due diligence and customer identification programs related to high-risk areas were also not adequately implemented.

In addition, the bank's audits and independent testing were found to be inadequate (not extensive enough, did not uncover weaknesses, contained flawed testing and sampling).  The Bank's training program was also found to be ineffective.

There also were systemic deficiencies in the bank's CTR (lacked accuracy) and SAR (timeliness) reporting program. The bank failed to refer specific inquiries from law enforcement to the area of the bank that investigated suspicious activities to determine whether SAR filings were appropriate and omitted the disclosure of several bank accounts in response to OCC requests.

The bank filed untimely SARs reporting structured transactions, submitted narrative descriptions that were sparse and confusing, maintained inaccurate or incomplete information about bank customers (CIP) that led to the filing of inaccurate CTRs and SARs, and failed to investigate suspicious activity occurring in accounts related to Saudi Arabia and Equatorial Guinea.

This was the largest civil penalty to date.

OCC/FinCEN

USD $25 million concurrent civil penalty (2004)

April 2004

Raiffeisen Zentralbank Österreich

Inadequate money laundering controls

GBP £170,000 fine

March 2004

Hudson United Bank

Inadequate AML compliance program

Failure to monitor certain South American money services business accounts in its New York branch.

USD $5 million fine

January 2004

Bank of Scotland

Failure to keep proper customer identification

GBP £1.25 million fine

USD $ 2.3 million fine

December 2003

Abbey National Asset Managers Limited

Abbey National Bank Plc

Inadequate money laundering controls

A small portion of the fine was for rule violations within Abbey’s asset management division, but most of it was for
violations within the bank’s retail operations.

GBP £2.3 million fine

USD $3.5 million fine

Failure to obtain the foreign bank certifications and other information required under sections 313 and 319 of the PATRIOT Act.

Hartsfield failed to obtain the certifications from six foreign banks, did not terminate its accounts as required, and despite receiving incomplete certificates from the accounts of ten other foreign banks, continued trading in the accounts until the SEC raised the issue.

Although the $10,000 penalty is small compared to the other fines assessed, it should be evaluated against the fact that Hartsfield's net capital at the time of the assessment was under $7,000. 

This was the first penalty imposed on a securities dealer and the first sanction on a financial institution for failing to obtain information from a foreign correspondent institution as required by the Patriot Act.

October 2003

Delta National Bank & Trust Company

Failure to file a Suspicious Activity Report (SAR) in connection with a Columbian national involved in a foreign currency exchange 

Transactions involved $5-10 million.

USD $950,000 forfeiture

August 2003

Western Union

Inadequate money laundering control procedures

Failure to file Currency Transaction Reports (CTRs)

USD $5 million fine

The FDIC also found a general failure to establish or implement an adequate system of internal controls for identification, investigation, documentation, reporting and record-keeping for non-customer beneficiaries of wire transfers of $3,000 or above.

With respect to the failure to file SARs on transactions appearing to be structured to avoid CTR requirements, the Bank noted the Suspicious Activity on the internal investigation log but determined the activity not to be unusual.  There was no analysis or documentation was kept to support this decision.

The bank was assessed a $5 million fine by the Korea Finance Intelligence Unit for failure to report overseas money transfers
believed to be linked to money laundering.

USD $5 million fine by Korea's FIU

May 2003

Mirage Casino

Failure to file Currency Transaction Reports (CTRs)

USD $5 million fine

April 2003

Paypal

Transmitting criminal proceeds from on line gambling

Pending

March 2003

Western Union

Failure to file nearly 600 Currency Transaction Reports (CTRs) and 63 Suspicious Activity Reports (SARs)

Western Union failed to file SARs for transactions across the same and different agents

FinCEN determines Western Union’s SAR procedures and systems to be inadequate

USD $3 million fine

January 2003

Banco Popular de Puerto Rico

Failure to file Suspicious Activity Reports (SARs)

This enforcement action involved allegations of laundering drug proceeds in violation of pre-PATRIOT Act BSA regulations.

The bank was accused of filing untimely/inaccurate SARs, particularly in the case of Roberto Pozzi involving $20 million in cash deposits where there were 416 CTRs filed.  Single SAR filed for 3 years of activity, SAR failed to give full extent of activity and was untimely, lack of due diligence as to KYC, failure to file supplemental SAR.

Pozzi laundered millions of dollars in drug proceeds through Banco Popular accounts.  Pozzi was indicted for money laundering in 1998.

Moreover, there were voluminous unusual or suspicious transactions in two accounts, Vallejo and a Dominican Republic Money Service Business, failure to report structuring, failure to investigate wire activity, failure to refer subpoena to compliance
Wire activity inconsistent with business of client, engaged in activity even after law enforcement notified them.  More than 30 million in drug money was laundered through the bank.

U.S. Department of Justice, in connection with the Federal Reserve Bank of New York and the Commissioner of Financial Institutions in Puerto Rico

USD $21.6 million civil forfeiture

USD $ 20 million concurrent civil money penalty

Deferred Prosecution

December 2002

Broadway National Bank
New York

Failure to file Suspicious Activity Reports (SARs) on large bulk cash deposits wired to Columbia, Panama, Switzerland, Lebanon and Pakistan totaling $123 million.

Failure to file Currency Transaction Reports (CTRs) $76 million was structured.

Failure to establish and maintain an AML program

First US bank criminally prosecuted for failing to establish an AML program, failure to file SARs, and involved the laundering of illegal drug proceeds.

USD $4 million fine

December 2002

Royal Bank of Scotland Plc  

Money laundering control failings - failure to file suspicious activity reports (SARs)

GBP £750,000 fine

December 2002

Western Union

Inadequate Compliance Program

Failure to file SARs and Currency Transaction Reports (CTRs)

Western Union was not aggregating multiple currency transactions totaling more than $10,000 during a day through multiple agents

USD $8 million fine

USD $7.3 million

This is the first time a money laundering statute, Section 1956(b) was used in a case against a foreign bank.