Bank Reports a Boon to Prosecutors
Suspicious-transaction reports by banks have helped federal prosecutors launch prosecutions for crimes ranging from terrorism to public corruption.
Such reports played a key role in the investigation of New York Gov. Eliot Spitzer, who allegedly made four payments of $5,000 or less to a high-priced prostitution ring known as Emporers Club VIP.
The Bank Secrecy Act requires financial institutions to file currency transaction reports with the federal government when customers make deposits or withdrawals of more than $10,000, the New York Times reports. A regulation also requires the banks to file reports if they suspect a crime involving at least $5,000.
Federal money laundering laws require banks to give extra scrutiny to suspicious financial transactions by “politically exposed persons,” including politicians, judges, prosecutors and government officials, the Wall Street Journal reports.
These reports have helped federal prosecutors pursue an increasing number of public corruption prosecutions and have been instrumental in other criminal cases, the Wall Street Journal story says. The criminal cases involve terrorism, drug trafficking, real-estate fraud and racketeering in the trash-hauling industry.
The Justice Department pursued 365 defendants in public corruption cases and gained 332 convictions in the six-year period covering 2001 to 2006. That is an increase over the eight-year period 1994 to 2000, when the department charged 286 defendants and gained 287 convictions.
As public corruption prosecutions increased, reports of questionable financial transactions more than quadrupled from almost 205,000 in 2001 to more than 1 million in 2006.
The suspicious transactions reports are sent to a database overseen by the Internal Revenue Service, but the Treasury Department’s Financial Crimes Enforcement Network does the initial analysis of the data. James Freis, director of the enforcement network, told ABA lawyers at a money laundering conference last October that the data has been valuable.
“The information that you provide not only gives law enforcement, regulatory and intelligence agencies [indications] of illicit activity,” he said, “but it also provides data for identifying patterns, trends, vulnerabilities and compliance-related deficiencies, and for focusing law enforcement resources.”
