Daily Archives: March 11, 2013

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Regulators to Squeeze Banks on Anti-Laundering Policies

Regulators to Squeeze Banks on Anti-Laundering Policies

WASHINGTON — Bankers are bracing for the start of more severe anti-money laundering exams as regulators rework their standards and prepare to issue another round of guidance tackling the issue.

The agencies, notably the Office of the Comptroller of the Currency, are feeling the heat as lawmakers blame them for not doing enough to ensure institutions are following anti-laundering standards.

Regulators are likely to make exams tougher for banks of all sizes, though officials have noted the most serious problems have arisen at the largest banks. Some of the biggest institutions — including HSBC, Citigroup and JPMorgan Chase — have recently drawn the toughest enforcement actions related to Bank Secrecy Act violations.

Fannie, Freddie form new mortgage securitization firm

Fannie Mae and Freddie Mac will build a new joint company for securitizing home loans as a stepping stone toward less government involvement in the mortgage market, the regulator of the U.S. government-controlled firms said on Monday.

“The overarching goal is to create something of value that could either be sold or used by policymakers as a foundational element of the mortgage market of the future,” Edward DeMarco, acting director of the Federal HousingFinance Agency, said in remarks prepared for delivery to an economic conference.

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Ex-Deutsche Bank worker says was fired after speaking out: lawsuit

(Reuters) – A former employee sued Deutsche Bank AG (DBKGn.DE) on Wednesday, claiming he was fired for speaking out and accusing the bank of ignoring his concerns about its internal controls and charges to clients.

Gary DeDilectis, who worked as a director of equity operations and asset servicing at the bank for more than four years, alleged that the bank violated the whistleblower protections of the 2002 Sarbanes-Oxley Act.

In his lawsuit, filed in U.S. District Court in Manhattan, DeDilectis contended he was fired in January 2012 after repeatedly telling his superiors about “potentially fraudulent conduct” by Deutsche Bank. His job was terminated “without warning or any explanation,” he said.

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How Many Billions Of Drug-Laundered Money Does It Take To Shut Down A Bank? Check out Senator Warren’s Response to Treasury Officials’ Testimony

Here is the transcript – note the Treasury officials never actually answer anything…

WARREN: … As Senator Reed just pointed out, the United States government takes money laundering very seriously for a very good reason. …

Now in December, HSBC admitted to money laundering. To laundering $881 million that we know of for Mexican and Colombian drug cartels. And also admitted to violating our sanctions for Iran, Libya, Cuba, Burma, the Sudan. And they didn’t do it just one time. It wasn’t like a mistake. They did it over and over and over again across a period of years. And they were caught doing it. Warned not to do it. And kept right on doing it. And evidently making profits doing it.

Now HSBC paid a fine, but no one 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. So what I’d like is, you’re the experts on money laundering. I’d like your opinion. What does it take? How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this? Mr. Cohen, can we start with you?

COHEN: Certainly Senator. No question the activity that was the subject of the enforcement action against HSBC was egregious…

WARREN: But let me just move you along here on the point Mr. Cohen. My question is, given that this is what you did, what does it take to get you to move towards even a hearing? Even considering shutting down banking operations for money laundering?

COHEN: Senator, we at the Treasury Department under OFAC and (ph) authority, we don’t have the authority to shut down a financial institution…

WARREN: I understand that. I’m asking, in your opinion, you are the ones who are supposed to be the experts on money laundering. You work with everyone else, including the Department of Justice.In your opinion, how many billions of dollars do you have to launder for drug lords, before somebody says, we’re shutting you down?

WARREN: … And I’m asking, what does it take, even to say, here’s where the line is. We’re going to draw a line here, and if you cross that line, you’re at risk for having your bank closed?

COHEN: But I’m not going to get into some hypothetical line drawing exercise.

WARREN: Well it’s somewhere beyond $881 million of drug money.

COHEN: Well Senator the actions, and I’m sure the regulators can address this issue. The actions that we took in the HSBC case, we thought were appropriate in that instance.

WARREN: So what you’re saying to me is you are responsible for these banks, and again, I read your testimony and you talk about the importance of vigorous enforcement here. But you’re telling me you have no view when it’s appropriate to consider even a hearing to raise the question of whether or not these banks should have to close their operations when they engage in money laundering for drug cartels?

WARREN: I understand that I’m over my time. And I’ll just say here, if you’re caught with an ounce of cocaine, the chances are good you’re going to go to jail. If it happens repeatedly you may go to jail for the rest of your life. 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. Every single individual associated with this. I just, I think that’s fundamentally wrong.

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