Senate Committee on Banking Holds Hearing on Lax Enforcement of the Bank Secrecy Act

Mar 13, 2013   
Print Friendly, PDF & Email

As recently reported, the Senate Committee on Banking, Housing and Urban Affairs (information here), on March 7, 2013, held a hearing on “Patterns of Abuse: Assessing Bank Secrecy Act Compliance and Enforcement”, see here. The committee, led by Senator Tim Johnson of South Dakota, and Ranking Member Mike Crapo of Idaho, directedquestions to David S. Cohen, the U.S. Treasury Department’s Undersecretary for Terrorism and Financial Intelligence, Thomas J. Curry, Comptroller of the Comptroller of the Currency, and Jerome H. Powell, a Federal Reserve governor. Mr. Cohen’s testimony is available here, Mr. Curry’s testimony is available here, and Mr. Powell’s testimony is available here.

The Senators asked numerous questions regarding why international banks appear to be too large to prosecute and why no individuals at the large international banks have been prosecuted. Senator Mark Warner

of Virginia commented, “I do not… believe that it can be the position of the United States government that any institution should be too large to prosecute.”

With respect to HSBC, Senator Elizabeth Warren noted that “HSBC paid a fine, but no individual went to trial, no individual was banned from banking, and there was no hearing to consider shutting down HSBC’s activities here in the United States.”  HSBC avoided criminal prosecution in its deferred prosecution agreement with the Justice Department and paid a penalty of $1.92 billion.  Warren went on to state: “But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night,” she added. “I think that’s fundamentally wrong.” (Rolling Stone’s rhetorical coverage of the HSBC case, which is representative of the coverage this story has received since being made public, is available here.)

Recently, Attorney General Eric Holder testified that some large banks are too large to prosecute, see here and here. In December, Senator Jeff Merkley was one of three Senators who wrote to Attorney General Eric Holder asking about the lax enforcement of financial institutions, specifically HSBC, and the widespread use of deferred prosecution agreements with them.  The recent activity on Capitol Hill suggests that after years of lax enforcement of international banks the U.S. Department of Justice, with overwhelming pressure from Congress, may be forced to increase scrutiny, which may result in criminal prosecutions for institutional and/or individual violations of the Bank Secrecy Act.

The attorneys at Fuerst Ittleman David & Joseph, PL have extensive civil and criminal experience litigating against the U.S. Government and defending targets of both civil and criminal investigations by the U.S. Department of Justice, the various Agencies of the U.S. Government, and the State of Florida.  You can contact an attorney by emailing us at or by calling us at 305.350.5690.