Lawmakers rip into regulators over money-laundering prosecution

From Washington Post
By Danielle Douglas
March 7, 2013

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…

Banking experts caution against regulators ramping up punishments against banks, which can be unwitting participants in criminals’ efforts to launder money. Federal authorities already have a full arsenal of weapons they can use against institutions, making the enhancement of regulations to remove bank officials unnecessary, said attorney D. Jean Veta of Covington & Burling…

But other analysts wonder whether regulators have sophisticated enough systems to properly monitor the biggest banks.

Said Mark Williams, a former bank examiner who teaches finance at Boston University: “The level of this money laundering and the fact it’s gone on for so long meant that regulators have been asleep.”