On September 27, 2006, Bank of America acknowledged that it allowed South American money launderers to illegally move USD 3 billion through a single Midtown Manhattan branch. Between May 2002 and April 2004, the money originating mostly from offshore shell companies went to Panama and the British Virgin Islands.
The Manhattan district attorney, Robert M. Morgenthau expressed his hope that this would make the federal government do more efforts to track illicit money transfers, including thosr related to terrorist financing.
Bank of America reported taking its anti-money laundering obligations seriously and never knowingly doing business with persons or businesses involved in illegal activities.
Most of the funds came from Brazil through a licensed money transmitter in Uruguay and then reached the branch of Bank of America. According to Morgenthau, the laundered USD 19 billion could not be directly tied to terrorists. He also said that, to escape detection, the launderers might have already shifted their money laundering operations outside Manhattan.
Over the last 3 years, Morgenthau’s office has shut down many illicit money transfer businesses, uncovered USD 19 billion of money laundering operations and returned USD 19 million.
Now, Bank of America is required to comply with any new anti-money laundering regulations proposed by regulators, without waiting for their enactment into law by Congress and President. Also, the bank agreed to pay USD 6 million to a district attorney’s office fund and USD 1.5 million to cover the costs of the 2-year investigation dealing with money laundering at the branch.
Bank of America is the largest commercial bank in the United States.
Another case is connected to Valley National Bank at 275 Madison Avenue in Manhattan. Robert M. Morgenthau announced the indictments of 34 people in Brazil and Uruguay and 16 companies in the British Virgin Islands on money laundering charges related to operations in Manhattan. All these charged cannot be extradited, but the charges are needed to help Mr. Morgenthau get a court order to seize USD 17.4 million now frozen at Valley National Bank.
Valley National Bank was not charged with any wrongdoings and cooperated with the investigation. The bank is one of the largest commercial banks headquartered in New Jersey.
2 years ago, the Bush administration dropped a proposal of increasing the Internal Revenue Service’s budget to pursue terrorist financing from USD 24 million to USD 36 million because it seemed too expensive to taxpayers. This year, USD 112 million has been budgeted to combat money laundering, which is an increase of 5.4% as compared to the last year. Mr. Morgenthau’s office carrying activity solely in Manhattan spent USD 1.5 million to investigate illegal money transfers at the Midtown Bank of America branch.