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#1359518 - 03/17/10 10:04 PM
Wachovia Cease and Desist and Deferred Prosecution
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Last edited by MS Kaybee; 03/18/10 04:28 PM. Reason: fixed second link to c&d
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#1359636 - 03/18/10 12:49 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
Kathleen O. Blanchard
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Next to Harvey
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As part of the Agreement filed today, Wachovia has agreed to forfeit $110 million to the United States, which represnts proceeds of illegal narcotics sales that were laundered through Wachovia. FinCEN also assessed a $110 million Civil Money Penatly that is deemed satisfied by the forfeiture to the U.S. government, for serious and systemic BSA violations. Today's historic agreement makes it clear that such conduct will not be tolerated and imposes the largest penalty in any BSA case prosecuted to date. These things always read like a slam dunk for the government... In turn, I always wonder what "the rest of the story" is.
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#1359640 - 03/18/10 12:52 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
Kathleen O. Blanchard
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Cape Cod
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The timing of the announcements may have been influenced by the impending merger of Wachovia into Wells Fargo. Given the severity of the bank's alleged lapses (the non-filed SARs alone are astounding) and the size of the bank, $160 million seems pretty tame as a financial penalty.
There are some important messages in the announcements for banks with RDC and/or foreign correspondent/casa de cambio accounts. One clear message is that you can't get away with simply saying "we can't afford the people needed to monitor this business."
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#1359928 - 03/18/10 04:42 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
Retread
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Joined: Jun 2002
Posts: 771
South
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Retread, thanks for sharing the link!
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#1360004 - 03/18/10 05:52 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
AnnRoy
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Joined: Dec 2005
Posts: 553
USA
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The part that bothers me about these types of articles, if you read into it, it seems like it was prompted by a drug bust.
Then turned into a "where do you bank" type prosecution of the bank. I am in no way defending Wachovia as I do not have all the details, but the C&D says the same thing all the BSA C&Ds say. That Wachovia had an inadequate BSA program because they banked these people. I am assuming that the transactions might have been high, and possibly even SARs were filed, but I think we could all find ourselves in this position.
We all have a customer or 3 that we suspect might be involved in something suspicious. We all monitor and file SARs. I believe this started with the bust. This is what worries me. So if my customer gets busted, I all of a sudden have an inadequate BSA program?
Last edited by John Burnett; 03/18/10 07:55 PM. Reason: corrected name of bank
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#1360035 - 03/18/10 06:17 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
CompDat
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Joined: Mar 2002
Posts: 2,355
The O.C., California
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Those dollar amounts of cash and wire transfers are astounding!
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#1360039 - 03/18/10 06:24 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
CompDat
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Joined: Jul 2006
Posts: 4,348
New York City
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We all have a customer or 3 that we suspect might be involved in something suspicious. We all monitor and file SARs. I believe this started with the bust. This is what worries me. So if my customer gets busted, I all of a sudden have an indadequate BSA program? From what I gather from the article, the reason the penalty was so harsh was that Wachovia was not performing adequate monitoring or filing timely SAR's. If they had, perhaps the penalty may not have been so harsh. As a bank, our job is to report suspicious activity via the SAR. We are not accountable for investigating or confirming the underlying crime.
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#1360078 - 03/18/10 06:51 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
ACBbank
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All of this did not happen over a 6-month or one-year period. Does anybody besides me wonder where the OCC was while all of this was going on?
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#1360159 - 03/18/10 07:42 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
Retread
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Joined: Jul 2006
Posts: 4,348
New York City
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All of this did not happen over a 6-month or one-year period. Does anybody besides me wonder where the OCC was while all of this was going on? I actually have the OCC in my FI at the moment doing a BSA/AML exam as part of our S & S. I'm waiting for them to bring this topic up, as my FI has a relationship with Wachovia.
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"100 victories in 100 battles isnt the most skillful. Subduing the other's military w/o battle is the most skillful." Sun-Tzu
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#1360392 - 03/18/10 10:46 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
Kathleen O. Blanchard
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"From what I gather from the article, the reason the penalty was so harsh was that Wachovia was not performing adequate monitoring or filing timely SAR's. If they had, perhaps the penalty may not have been so harsh."
Harsh?? Are you sure? They appear to have turned a willful blind eye and helped launder potentially $400 Billion. You don't see Federal prosecution for a mere oversight. Filing SARs in this case would have been a moot point. The Bank was allowing these transactions to happen and the Bank was party and assisting them through offering them things like "pouch" and "RDC" services without any regard to appropriate due diligence. They made themselves a party to the money laundering - hence the prosecution.
IMHO, without the merger with Wells Fargo, we may have witnessed the first execution under the BSA death penalty.
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#1360573 - 03/19/10 01:30 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
rlcarey
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Cape Cod
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And I believe that the timing of these announcements is deliberate. It puts a firm number on the costs just before the planned merger of the banks under the Wells Fargo holding company.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#1360632 - 03/19/10 02:03 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
rlcarey
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Power Poster
Joined: Jul 2006
Posts: 4,348
New York City
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"From what I gather from the article, the reason the penalty was so harsh was that Wachovia was not performing adequate monitoring or filing timely SAR's. If they had, perhaps the penalty may not have been so harsh."
Harsh?? Are you sure? They appear to have turned a willful blind eye and helped launder potentially $400 Billion. You don't see Federal prosecution for a mere oversight. Filing SARs in this case would have been a moot point. The Bank was allowing these transactions to happen and the Bank was party and assisting them through offering them things like "pouch" and "RDC" services without any regard to appropriate due diligence. They made themselves a party to the money laundering - hence the prosecution.
IMHO, without the merger with Wells Fargo, we may have witnessed the first execution under the BSA death penalty. Well, if I recall correctly, it's the largest penalty handed down due to BSA violations. I do agree that they turned a blind eye to what was going on, but what would you have LE and the Regulators do? Fine them so much it impacts their stability? Put them out of business? What would that have accomplished? I think the message is very clear with this penalty. I'm not trying to make excuses their failures, but what else would you suggest should have been done?
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"100 victories in 100 battles isnt the most skillful. Subduing the other's military w/o battle is the most skillful." Sun-Tzu
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#1360644 - 03/19/10 02:09 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
ACBbank
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Posts: 2,548
Southeast
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Remember this? http://www.occ.treas.gov/ftp/release/2008-48b.pdfAccording to a related news article, the drug investigation was announced a day or two after this settlement. It sounds like Wachovia has a pattern of risky behavior. "When you play with fire, you are going to get burned".
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#1361370 - 03/20/10 12:12 PM
Re: Wachovia Cease and Desist and Deferred Prosecution
First Banker
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Posts: 83,364
Galveston, TX
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"but what would you have LE and the Regulators do? Fine them so much it impacts their stability? Put them out of business?"
That is exactly what I was suggesting may have happened if Wells had not been in the picture as they may not have opted for a deferred prosecution. The purchase by Wells basically already accomplished the goal.
Title XV: Annunzio-Wylie Anti-Money Laundering Act of 1992
Subtitle A: Termination of Charters, Insurance, and Offices
Amends the Federal Deposit Insurance Act and the Federal Credit Union Act to authorize the Federal Deposit Insurance Corporation and the Federal Credit Union Administration Board to accept conservatorship or receivership of an institution under their respective jurisdictions upon written notification by the Attorney General that it has been found guilty of certain money laundering offenses.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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