Last year saw a sharp increase in investigations targeting the illicit flows of funds through financial institutions. In three prominent enforcement actions in 2012—against ING, Standard Chartered Bank and HSBC—prosecutors and regulators extracted massive fines for conduct ranging from intentional concealment of illicit transactions to ineffective monitoring. The crackdown focused not just on how these banks facilitated transactions by parties subject to U.S. trade sanctions, but also on how they failed to conduct due diligence on customers and foreign financial institutions who made suspicious transfers.

The statutory bases for investigation and prosecution of this conduct have long existed in federal and state law.1 The U.S. Department of Justice and Department of the Treasury’s Office of Foreign Assets Control (OFAC) have targeted violations of trade sanctions laws and regulations that prohibit transactions with individuals and companies in Cuba, Iran, North Korea, the Sudan and Syria, among others. In addition, the federal government has long pursued cases involving money laundering—transactions intended to conceal the origin or nature of illicit proceeds or to avoid reporting requirements.2 Recently, however, the federal government has signaled an increased focus on these crimes, including through the creation in 2010 of a Money Laundering and Bank Integrity Unit within the DOJ. The unit, staffed at its inception with 14 prosecutors, investigates and prosecutes complex national and international cases, and focuses exclusively on financial institutions.3

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