Bank of America Settles Money Laundering Suit for $7.5 Million

The Bank of America recently settled a money laundering suit brought by Manhattan District Attorney, Robert M. Morgenthau for $7.5 million, $6 million in penalties and $1.5 million in costs, ending an almost three year investigation conducted in coordination with foreign authorities. [1]

District Attorney Morgenthau said that a series of transfers, totaling more than $3 billion, prompted the investigation because they possessed some of the ear-marks of terrorist financing, much of which comes from South America. [2] The transfers originated in offshore shell companies owned by illegal Brazilian money services and were routed through the Bank of America account of a Uruguayan money remitter. [3] Although officials do not know the identity of many of the recipients, District Attorney Morgenthau believes that some of the transferred funds went to Mideast terrorist organizations. [4]

Under the terms of the settlement, Bank of America admitted that it failed to adequately asses the risk of some of its customers, agreed to cooperate with ongoing investigations, and to improve its anti-money laundering program. [5] Even so, Bank of America admitted no wrong, stating that it takes money-laundering seriously and that it never has knowingly done business with parties engaged in illegal activities. [6]

The Bank of America investigation was part of an on-going anti-money laundering program that has traced almost $19 billion in illegally transferred funds, and recovered $19.5 million for the city and state. [7] District Attorney Morgenthau also announced that thirty four individuals and sixteen British Virgin Island companies, all of whom were involved with illegal transmissions of money from Brazil, had been indicted for violation of New York’s banking laws. [8] As Brazilian authorities are criminally prosecuting the defendants, in it is unlikely that District Attorney Morgenthau will prosecute them in the United States. [9] However, the indictments were necessary to freeze their illegally transmitted assets, which total $17.4 million. [10]

[1] David Enrich & Chad Bray, Bank of America Settles NYC Probe, Business Week online, Sept. 27, 2006, http://www.businessweek.com/ap/financialnews/D8KDFIN03.htm?chan=search.

[2] WSOCTV.com, Bank of America Will Pay Millions To Settle Money Laundering Probe, Sept. 28, 2006, http://www.wsoctv.com/news/9953620/detail.html.

[3] Enrich & Bray, supra note 1.

[4] WSOCTV.com, supra note 2.

[5] Id.

[6] Enrich & Bray, supra note 1.

[7] WSOCTV.com, supra note 2.

[8] Enrich & Bray, supra note 1.

[9] Enrich & Bray, supra note 1.

[10] Enrich & Bray, supra note 1.