Academic journal article Fordham Journal of Corporate & Financial Law

The Role of Intent in the Rise of Individual Accountability in Aml-BSA Enforcement Actions

Academic journal article Fordham Journal of Corporate & Financial Law

The Role of Intent in the Rise of Individual Accountability in Aml-BSA Enforcement Actions

Article excerpt

Introduction

Historically, criminal prosecutions and civil actions against financial institutions for violating the requirements of the Bank Secrecy Act1 ("AML-BSA enforcement actions")2 did not seek to hold individuals accountable for specific violations.3 As a result of this practice, the government faced significant public criticism for a perceived failure to pursue seemingly intentional misconduct.4 Ultimately, regulators began to acknowledge that individual accountability for wrongdoing within corporations is essential to ensure effective deterrence5 and to maintain the public's faith in the justice system.6 A recent policy shift within the Department of Justice (DOJ) has begun to place a greater focus on the prosecution of individuals within corporations.7 This has led to increased prosecutions of compliance personnel and bank officials for violations of the Bank Secrecy Act (the "BSA") and other money laundering statutes.8 This shift in enforcement has been criticized as unfair and overly harsh.9 However, this Note demonstrates that the statutory and prosecutorial focus on an individual's culpability in relation to the conduct substantially mitigates any such concerns.10 Further, this Note demonstrates that the recent shift towards individual accountability in AML-BSA enforcement can help deter violations of the BSA and restore public confidence in the justice system.11

Part I of this Note reviews relevant concepts in criminal law, explores the harm of money laundering, and explains the importance of intentional conduct in the AML-BSA statutory framework. Part II outlines the recent rise of individual accountability in AML-BSA enforcement actions and describes criticism which has been offered against it. Part III explains how (1) AML-BSA enforcement actions against individuals require a high degree of culpability by compliance personnel or bank officials; (2) criticisms offered against increased individual accountability are largely misguided because of the focus on culpability; and (3) the recent shift towards individual accountability in AML-BSA enforcement can serve to deter violations of the BSA and restore the public's faith in the justice system.

I.The Role of Culpability in the Statutory Framework Prohibiting Money Laundering in the United States

The statutory framework prohibiting money laundering in the United States establishes criminal or civil liability only for culpable individuals who have engaged in some form of intentional or reckless misconduct.12 This section provides a detailed discussion of the role of culpability in various federal statutes that prohibit money laundering in the United States.

A. Criminal Law Concepts: Culpability, Deterrence, and Retribution

This Note argues the law should be applied to punish culpable individuals with balanced consideration of retributive and utilitarian motivations for punishment.13

Retributive justice calls for punishment because the conduct itself deviates from what society deems morally acceptable and serves as a form of retaliation by society against the criminal.14 Utilitarian justice calls for punishment as a form of deterrence to prevent the individual criminal, and society in general, from engaging in the prohibited conduct in the future.15

In the context of individual accountability for money laundering by financial institutions, public demands for individual accountability reflect retributive motivations for punishment of wrongdoing,16 whereas regulators' focus on individual accountability generally reflects utilitarian motivations seeking deterrence.17 Prosecuting individuals in a manner that reflects both retributive and utilitarian objectives is essential to maintaining the public's confidence in the justice system and to preventing future crime.18

Mens rea is a concept in criminal law that assigns the requisite mental state required for liability for a given offense.19 For example, intentionally killing someone creates liability for murder which results in harsh punishment. …

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