Senate Democrats lit into Treasury and Federal Reserve officials Thursday over the handling of anti-money-laundering cases, questioning whether regulators are treating big banks accused of violating U.S. laws with kid gloves.
The heated debate unfolded even as bank regulators told lawmakers that they plan to step up efforts to remove bank employees and executives who don't stop criminals and terrorists from moving money through the U.S. financial system — though so far that has been more common at small banks than large ones. Regulators can also issue civil money penalties or hit banks with enforcement orders when laws are broken.
Critics say such actions have not acted as a deterrent because megabanks can easily absorb hefty fines, with little or no reputational risk. Authorities, they say, need to hand down more criminal indictments and start treating bankers like any other citizens.
"If you're caught with an ounce of cocaine, chances are good you're going to go to jail," Sen. Elizabeth Warren (D-Mass.) said during a Senate banking committee hearing Thursday. "Evidentially, if you laundered nearly a billion dollars for drug cartels . . . your company pays a fine and you go home and sleep in your own bed."
Warren's remarks arose out of a discussion about regulators' decision not to shut down HSBC or remove any of its employees for allegedly laundering money for Mexican drug cartels. The British bank agreed to pay $1.9 billion in December to settle charges raised in a 340-page report from the Senate's permanent subcommittee on investigations.
The report detailed years of poor monitoring practices at HSBC's affiliate in Mexico, including instances of affiliates flouting government safeguards meant to block funding for terrorists. Lawmakers were puzzled when no criminal charges were filed despite the evidence.
Referencing that case, members of the committee voiced concerns about comments made a day earlier by U.S. Attorney General Eric H. Holder Jr., who said the size of financial institutions may inhibit prosecution.
Holder, the top Justice Department official, had told the Senate Judiciary Committee that he worried that bringing criminal charges against globally connected megabanks could have a negative impact on the economy.
rest http://www.washingtonpost.com/business/economy/lawmakers-rip-into-regulators-over-money-laundering-prosecution/2013/03/07/74cbaf60-873f-11e2-999e-5f8e0410cb9d_story.html
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