OCC Lists Ways It Will Tighten Enforcement of Launder Laws

By Heller, Michele | American Banker, July 16, 2004 | Go to article overview

OCC Lists Ways It Will Tighten Enforcement of Launder Laws


Heller, Michele, American Banker


The Office of the Comptroller of the Currency on Thursday promised tougher enforcement of money-laundering laws.

"While we believe that the current regulatory scheme generally works well with respect to banks, there is clearly room for improvement," Daniel P. Stipano, the deputy chief counsel of the OCC, told a Senate panel.

His testimony came at a hearing focusing on the latest revelations of suspicious accounts that Riggs Bank held for notorious foreign leaders. The OCC, which in May fined Riggs $25 million, has been under fire from Congress for months for failing to compel Riggs' compliance with laundering requirements despite knowing about dubious accounts and deficiencies in the bank's controls since at least 1997.

Mr. Stipano said measures the OCC is taking include:

* Issuing a revised Bank Secrecy Act handbook for examiners by yearend.

* Changing its enforcement policy "to emphasize areas where there is a statutory mandate to take enforcement actions under certain circumstances."

* Establishing two programs to give examiners "stronger and more complete analytical information" on banks that may be at high risk for money laundering.

* Finding ways to track situations like the one at Riggs where follow-up action was not taken.

Mr. Stipano also said that in some cases regulators should target executives instead of the bank itself for failure to comply with laundering rules.

"Generally, it's not efficient to chase after banks with cease-and-desist orders," he said. "Sometimes it's best not to assess banks, but to go after individuals."

Mr. Stipano's comments came during a standing-room-only hearing in the Senate permanent subcommittee on investigations.

Lawmakers spent more than four hours questioning Riggs and OCC officials on a 113-page report prepared by the panel, hundreds of pages of OCC and bank documents, and affidavits from OCC examiners. The paperwork detailed suspicious accounts and transactions Riggs managed for the former Chilean dictator Augusto Pinochet and the autocratic government of Equatorial Guinea that were not reported to regulators or law enforcement.

Senators put the OCC on notice to make good on its promise to ratchet up enforcement.

"We will be watching carefully to see if that happens in a number of areas," said Sen. Carl Levin, a Michigan Democrat who serves as the top Democrat on the subcommittee and whose staff spent a year investigating money laundering enforcement.

Sen. Levin said that unlike other lawmakers, he is "not yet there" in suggesting that Congress transfer money-laundering enforcement powers from bank regulators to a law enforcement agency. But he told the OCC that "how you act in the next few months is going to affect a lot of people's judgment on that issue."

Subcommittee Chairman Norm Coleman warned executives of all banks that they will face a stricter regulatory scheme if further problems are found. …

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