Record-setting bank forfeiture at ING ignites debate over lack of banker prosecutions

June 20, 2012

By Brett Wolf

NEW YORK, June 20 (Thomson Reuters Accelus) – A lack of any criminal prosecutions associated with the U.S. government’s deal last week in which Dutch bank ING agreed to forfeit a record $619 million for helping Iranians and Cubans pump billions of dollars through the U.S. financial system has drawn accusations that U.S. law enforcement agencies would rather collect fines than punish individual executives.Authorities dispute the criticisms and say proving wrongdoing by individuals in such cases is harder than it seems.

“It seems like the only people the government wants to prosecute are low-level drug dealers who structure cash deposits at banks. They go to jail,” said retired Drug Enforcement Administration agent Bob Mazur. “But institutions that commit massive crimes to move billions of dollars simply pay fines. Maybe this is considered by the government to be too lucrative a revenue stream to worry about putting people behind bars.”

Mazur said ING is just the latest in a long line of international banks that have failed to comply with U.S. anti-money laundering, tax and sanctions laws and when caught simply paid fines, which total billions of dollars, to resolve the matters. Mazur is the author of “The Infiltrator,” a book about his undercover work in the 1980s that helped bring down the corrupt Bank of Credit and Commerce International (BCCI).

The Justice Department and New York County Attorney General’s Office, which together have handled the high-profile cases that Mazur criticized, said they will always bring criminal charges where evidence permits.

“I understand people want to see not just the banks pay a lot of money but see individuals prosecuted; I think we all share that desire, we just have to be mindful that we have to have legally sufficient evidence to prove the case beyond a reasonable doubt,” said Adam Kaufmann, chief of the New York County District Attorney’s Office’s investigations division.

With regard to ING, the agencies’ probe found that the bank illegally moved billions of dollars linked to sanctioned parties in Cuba, Iran and elsewhere through banks in Manhattan between the early 1990s and 2007.

Among other things, the bank systematically removed references to sanctioned parties from wire transfer payment messages, a tactic that, it has emerged, was once a common practice at several major European and British banks and has been dubbed “stripping.” As in past cases, the agencies will split the $619 million forfeiture.

Documents filed in federal court in Washington include a number of references to emails in which ING employees were told to take steps to hide the true identities of U.S.-sanctioned parties to ensure that their transactions cleared the U.S. sanctions net, but there is no sign that prosecutors plan to bring charges against any of the bankers involved in the email exchanges, Mazur said.

Value of banker prosecutions

In the BCCI case, Mazur said, several executives including BCCI President Swaleh Nazvi, were convicted on federal charges for their roles in the bank’s criminal acts. He noted that Amjad Awan, who was convicted of money laundering for his work in the bank’s Latin America division, ultimately cooperated with prosecutors and offered testimony that helped convict former Panamanian strongman Manuel Noriega on drug trafficking and money laundering charges in 1992.

“That is why you can’t just fine crooked bankers,” Mazur said.

In 2009, Swiss giant UBS paid a $780 million fine to the Justice Department as part of an agreement in which it admitted to fraud and conspiracy in helping about 19,000 wealthy Americans hide up to $20 billion in secret bank accounts.

But the only UBS banker who was criminally prosecuted, Mazur said, was former private-banking executive Brad Birkenfeld, who voluntarily disclosed UBS’ misdeeds to the Justice Department in 2007.

“The only guy who went to jail was the guy who brought the information to the government. The whistleblower went to jail,” he said.

“As long as the government gets its share of the dirty money, I guess it doesn’t care about putting criminals behind bars.”

Prosecutors respond

The decision is still out on whether any ING bankers will face prosecution, Kaufmann said. The district attorney’s office and Justice Department are still reviewing the evidence gathered during their investigation, he said.

“They’re continuing to look at individuals to see whether anyone can or should be prosecuted and we’re helping them look into those individuals,” he said. “I think the Justice Department will make some determinations as to whether the guilt of anyone can be proven beyond a reasonable doubt.”

With regard to international investigations there are some “real life difficulties securing the evidence and securing witnesses,” Kauffman said. He declined to elaborate.

The privacy laws of European countries can make it difficult to identify individual suspects at foreign financial institutions because, for instance, U.S. prosecutors may be able to obtain only redacted documents that do not name individuals who circulated damning emails, a former Justice Department official said on condition of anonymity.

Even if adequate evidence is collected, forcing foreign nationals to appear as witnesses in a U.S. courtroom can be extremely difficult, if not impossible, the source said.

A former federal prosecutor said the comprehensiveness of the Mutual Legal Assistance Treaty (MLAT) the U.S. government has signed with any particular foreign counterpart plays a key role in determining whether it is possible to gather evidence sufficient for a criminal prosecution during an international investigation.

“Subpoenas are no good, and you instead need MLATs. Interviews in foreign countries require special authorization from that country and it tends to invite reciprocal treatment of our financial institutions operating in the foreign country. It’s a mix of practical problems and policy,” he said.

Jennifer Shasky Calvery, head of the Asset Forfeiture and Money Laundering Section in the Justice Department’s Criminal Division, said department policy is to prosecute in any situation “where we have evidence of criminal wrongdoing by individuals, in terms of bank secrecy violations or money laundering activity, or sanctions violations.”

“The fact is sometimes with financial institutions you might have a collective knowledge that is sufficient to take action against the financial institution, and shows the wrongdoing of the financial institution as a whole, but there might not be evidence of any one person’s intent sufficient for prosecution,” she said.

When asked whether the Justice Department plans to pursue criminal charges against any ING bankers, Shasky Calvery declined to comment. She said, however, that ING agreed to cooperate fully with any future Justice Department investigations.

“In every case we’re interested in seeing which, if any, individuals may be culpable, so this case is no different in that regard,” she said.

ING has taken disciplinary action against more than 60 employees involved in the sanctions violations, ING spokeswoman Carolien van der Giessen said in a statement emailed to Reuters. When asked to respond to those calling for the criminal prosecution of the employees, she declined to comment.

Partnership questioned

When former Treasury official Peter Djinis heard about the ING Bank forfeiture, he questioned the rationale for the involvement of the district attorney’s office in “stripping” cases. His comments echoed criticisms levied against the office for years under the leadership of former Manhattan District Attorney Robert Morgenthau, who had a reputation for targeting errant financial institutions.

“I continue to be surprised that the Manhattan District Attorney’s Office spends years of its office’s resources and personnel on what is unarguably a federal crime, not a city or state crime,” Djinis said. “Was the DA’s office concerned that the feds could not do an adequate job investigating the violations? Or, perhaps more cynically, was it more concerned that it would not share in the deep pockets penalty the federal investigation was most assuredly going to extract from ING?”

ING is the fourth major bank to settle with New York and U.S. authorities over “stripping” information from wire transfers that would have identified sanctioned parties’ involvement. In 2009, Credit Suisse AG agreed to pay a $536 million fine and Lloyds TSB Bank Plc agreed to forfeit $350 million. Barclays settled in 2010 for $298 million.

Later that year, another Dutch bank, ABN AMRO, settled a case with the Justice Department, agreeing to pay $500 million.

Kaufmann disputed the notion that the Manhattan office is intruding in the “stripping” investigations. He said the office played a key role in the probes and added that it was one of his analysts who uncovered the sanctions violations of Lloyds and Credit Suisse and brought them to the attention of the Treasury and Justice Departments.

The district attorney’s office had partnered with the Federal Bureau of Investigation to probe the New York-based Alavi Foundation’s links to the Iranian government, and one of his analysts “came across some wire payments that were coming in from an Iranian bank but were coded as if they appeared to be coming from Lloyds and Credit Suisse,” he said.

“Once you’re into a subject matter and you’re talking to witnesses, and you’re looking at emails, you find more and more cases. So I think it’s erroneous to say that we’re sort of intruding into a federal area,” Kaufmann said.

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus. <a href=” ions/regulatory-intelligence/compliance- complete/” target=_new”>Compliance Complete</a> provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges.)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see

when corporations can get a death penalty,
then i will believe they are like people.

Posted by stromatolite | Report as abusive

The Tax Division of the Justice Department, which is the enforcement arm of the IRS, went after their own whistleblower, Bradley Birkenfeld, in order to undercut his IRS whistleblower claim. They also wanted to marginalize him as they tried to claim credit for the UBS investigation which, by the way, was politically corrupted from inside the Bush DOJ.

It is worth noting that Phil Gramm was vice chair of UBS when Birkenfeld blew the whislte on the bank. Also, UBS had an entire desk devoted to what they called “PEPs” – Politically Exposed Persons (American politicians). Yet, not one single PEP was ever publicly exposed in the UBS scandal. Why hasn’t anybody noticed this?

Posted by Insider7 | Report as abusive

Keep in mind there is not such thing as an honest banker. It’s an oxymoron…like military intelligence.

Posted by robertsgt40 | Report as abusive