The recent terrorist attacks in Paris have resulted in an increase of scrutiny and enforcement of banks against terrorism financing and money laundering. Anti-money-laundering laws require banks to have a system to detect and prevent money laundering. These laws have been enforced more strongly in the last five years and a number of major fines for deficiencies at big banks have led other lenders to focus on anti-money-laundering compliance.
In addition to trying to trace funds used to support terrorists groups, the federal government is seeking to assure that banks have systems in place to uncover unusual transactions in accordance with existing criminal and civil laws. For example banks will be examined to assure that they uncover transactions with countries under United States sanctions including Iran and the Soviet Union.
Increased action is follow the protocols set since the attacks in the U.S. on Sept. 11, 2001: After every major terrorist event in a G-7 country, he said, there’s been a ratcheting up of compliance requirements and enforcement.
Since the attacks on 9-11-2001 U.S. officials have been examining suspicious activity reports filed by banks to the U.S. Department of Treasury, as they are required to do under law.
These activities and banks own scrutiny are expected to assist in determining money flows to terrorist organizations allowing various governments to target them. Failure of banks to report suspicious activities can result in severe penalties against banks and individuals. In addition, there are whistleblower laws which allow individuals to report suspicious financial activities and a financial institutions refusal to report. Those laws allow a whistleblower to collect a percentage of the penalties against the financial institutions engaged by the government.
HSBC Holdings agreed in 2012 to pay $1.9 billion for Mexican money-laundering lapses and sanctions violations, it and other banks have severed ties to some foreign lenders and money-changers. Last year, French bank BNP Paribas agreed to pay $9 billion after pleading guilty to helping clients steer money illegally into Iran and other countries.
Jeffrey Newman represents whistleblowers