Banks Reviewing Federal Clarifications Of Reporting Laws

By Suzy Valentine
Miami-Dade County banks, often subject to money-laundering questions, should be more clear on some procedures thanks to explanatory notes provided a month ago by a government agency.

The Financial Crimes Enforcement Network issued guidance and advisory notes April 26 for money services nationwide – clarifications at least one banker in Miami-Dade County helped request.

The network requires banks to report deposits of more than $10,000 as well as "any other suspicious financial activity."

The US Department of Treasury subdivision listed Bank Secrecy Act obligations that form part of the complex matrix financial institutions must navigate in the wake of 9/11.

"We need guidance," said Miriam Lopez, president of Transatlantic Bank. "As a community, we’ve been treated more harshly than other banking centers. In South Florida, there is a perception that we are higher-risk."

That perception may come from a Bureau of Justice special report published in July 2003 that showed the region eclipsed others in money-laundering referrals in 2001, the year of the terrorist attacks.

That year, 106 incidents were referred from South Florida, compared with 83 from New York and 78 from Puerto Rico. Greater Miami is designated a high-intensity financial-crimes area.

The classification has placed additional burdens on financial institutions here from the federal Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.

"They’ve been harder on banks over the past two years," she said.

The National White Collar Crime Center defines money laundering as "the illegal practice of filtering ‘dirty’ money, or ill-gotten gains, through a series of transactions until the funds are ‘clean.’"

Miami-Dade has cleaned up its reputation as a money-laundering hub, one security expert said.

"There are obvious geographical and cultural influences given its nexus to Latin America," said Tom Cash of Kroll Inc. "Banks down here have been through the ringer. They may be more alert to money laundering, and a number have been slapped with cease-and-desist orders. If you look at recent grievances, it is banks such as the Bank of New York or Banco Popular de Puerto Rico that have most recently been identified."

Mr. Cash said there have been significant improvements in bank procedures here. "That’s not to say that everyone has found Jesus and we’re all saved," he said. "Prior to 9/11, a lot of the activity was drug-related, but felons are looking at more creative mediums now."

He said that during the past five years, a number of large financial scandals leading to indictment have had a money-laundering element. Discovery of the wrongdoing had been accidental in many cases.

"Most of those were cases the agencies came across by chance," said Mr. Cash. "After the bank accounts are subpoenaed during investigations, money laundering comes to light.

"Miami banks are synonymous with high risk for customers," he said. "A fraud case in Boca Raton uncovered money-laundering activity."

Miami financial institutions that were caught had taken a chance on a politically exposed person, he said. "If banks take on high-risk persons," said Mr. Cash, "then when the accounts of felons are examined, they’ll be traced back."

He cited a bank in Chile that counted Gen. Augusto Pinochet among its customers and Citibank, which held an account for Raul Salinas, brother of former Mexican president Carlos Salinas.

Banks had knee-jerk reactions to the Patriot Act, he said. "Banks are not taking risks and are in danger of filing too many reports," said Mr. Cash. "Then they submit something akin to a New York telephone directory. Some are using automated programs."

"Banks are engaging in defensive filing," said Ms. Lopez. "It has been bothersome for the Financial Crimes Enforcement Network because it’s difficult for the unit to weed out the suspicious from the unsuspicious. It’s also a costly process. The money devoted to being compliant could be better used to serve the community."