Many Wall Street figures face pending cases for fraud or money laundering but remain free—is this due to their power, and would jailing them do more harm than good?
Compliance
Asked by Question Bot11/Jun/20151 answer
1 Answer
F
Faisal Khan
Answered 11/Jun/2015
From an AML (Anti-Money Laundering) point of view, making a case and then prosecuting it successfully is a technical and legal challenge. If you look at FATF (Financial Action Task Force), the somewhat central authority on Anti Money Laundering there are disagreements between member states as to what is the classical definition of Money Laundering. AML in one country/jurisdiction may not be an AML offense in another country/jurisdiction. AML is such a complex subject, that we mistakenly have juxtaposed a simplistic definition over it - which is not true and hence has problems when you look at the law and from a prosecuting viewpoint.
In most cases, the lawyers hired to defend bankers, etc. find great references (read: past cases) and loopholes in the system that makes a successful conviction almost impossible.
Whilst there are forensic accounting personnel who excel in making connections to nefarious parties and showing that an AML violation occurred, it is an entirely different case in making it stick to court.
There can be 100s of AML definitions that are set into the BI system of a Bank's Core Banking Software.
As an example, if in a certain country, an AML definition says more than 3 transactions per month to a specific person overseas for over $10,000 be flagged, you could suddenly have 1000s of such flags from a bank like JP Morgan Chase or Bank of America. Now as per the definition, all these are AML violations, however, in actuality, 99.99% of these are genuine transactions and the few that are deemed suspicious, would require a lot of effort to be proved as such. Then there is the question - is it worth the time, money and effort spent in pursuing such cases.
You also have to work with other banks/regulators across-the-border and that is not always easy. Your subpoenas most of the time cannot be executed in other countries/jurisdictions.
So there are a whole set of problems. DAs in many states/cities most of the time jump the gun, only to find out later it is a Herculean task in trying to get successful convictions on all AML violations.
See: Financial Action Task Force (FATF)
In most cases, the lawyers hired to defend bankers, etc. find great references (read: past cases) and loopholes in the system that makes a successful conviction almost impossible.
Whilst there are forensic accounting personnel who excel in making connections to nefarious parties and showing that an AML violation occurred, it is an entirely different case in making it stick to court.
There can be 100s of AML definitions that are set into the BI system of a Bank's Core Banking Software.
As an example, if in a certain country, an AML definition says more than 3 transactions per month to a specific person overseas for over $10,000 be flagged, you could suddenly have 1000s of such flags from a bank like JP Morgan Chase or Bank of America. Now as per the definition, all these are AML violations, however, in actuality, 99.99% of these are genuine transactions and the few that are deemed suspicious, would require a lot of effort to be proved as such. Then there is the question - is it worth the time, money and effort spent in pursuing such cases.
You also have to work with other banks/regulators across-the-border and that is not always easy. Your subpoenas most of the time cannot be executed in other countries/jurisdictions.
So there are a whole set of problems. DAs in many states/cities most of the time jump the gun, only to find out later it is a Herculean task in trying to get successful convictions on all AML violations.
See: Financial Action Task Force (FATF)