Tuesday, October 29, 2013


I call it the Riggs Bank/Wachovia Bank approach to dealing with massive AML/CFT violations; cause bank ownership to sell out and dismantle the offending financial institution, The problem is: it is not deterring other banks from blatantly disregarding their AML/CFT responsibilities; Here's why.

Whether it be a Riggs, or a Wachovia, or a Lebanese-Canadian Bank, the results are the same:

(1) Another financial institution takes over some or all of the bank's assets. The bank's Shareholders get paid. The bank simply ceases to exist; its charter is never revoked, no matter how serious the violations.

(2) the successor bank generally keeps most of the branches. The public does not perceive any interruption in operations, nor that a strong penalty was imposed.

(3) The fines & penalties, which rarely exceed five per cent of the bank's annual profits, are levied, and easily paid.

(4) Absolutely none of the senior bank officers, or the ranking compliance staff, are ever charged with a crime, and they often transition to yet another bank, without losing a step in their careers, or a dime from their income.

(5) The directors of the bank, at whose feet final responsibility sits, are never punished for failing to direct bank staff properly.

The results: other bankers, who see that, over and over again, no serious penalty is ever imposed upon even the worst offenders, are not deterred, and place profits above complying with our AML/CFT laws and regulations. They know that they can pay fines out of profits, that regulators are afraid to revoke the charter of any national bank, and that their officers and compliance staff will not be charged in criminal court.

Is there a solution ? It is obvious; change all of the above. make an example out of the worst of the worst; criminal charges, charter revocation, and dismantling of the bank, not the sale of its assets at a profit. That will make others sit up and take notice. The problem appears to be that it is deemed to be politically incorrect, and thus the problems continue.

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