U.S. prosecutors are using a new tactic to crack down on banks that fail to fight money laundering: systematically asking suspects in a wide range of criminal cases to help them follow the money back to their bankers.
The efforts are paying off in probes of banks and other financial institutions now filling the prosecution pipeline, according to Jonathan Lopez, who last month left his post as deputy chief of the Justice Department's Money Laundering and Bank Integrity Unit (MLBIU).
"Asking criminals the simple question 'Who is moving your money?' can lead the Department of Justice to a financial institution's doorstep," said Lopez, who declined to identify specific targets.
The department confirmed the stepped up reliance on criminal informants in anti-money laundering investigations, but also declined to discuss probes underway.
The four-year-old MLBIU, which includes a dozen prosecutors, is responsible for insuring that financial institutions adhere to U.S. laws including the main U.S. anti-money laundering law, the Bank Secrecy Act (BSA). It has filled in an enforcement gap among federal financial regulators who lack the capacity or expertise to aggressively pursue money-laundering cases.
The Justice Department has begun seeking banking information not only from perpetrators of fraud and drug traffickers, but also from suspects linked to the full range of criminal activity, said Lopez, who is now an attorney at Orrick, Herrington & Sutcliffe LLP in Washington. Many criminals seeking reduced punishment have pointed fingers at banks, casinos, money transfer businesses, check cashers, broker-dealers and other financial institutions, he said.
"Essentially any criminal who moves money can be a potential gateway to a financial institution," he said.
The money-laundering unit has worked with Justice Department prosecutors and investigators around the country to ensure that grilling suspects for money-laundering leads is a routine part of every investigation, Lopez said.
"We have been telling prosecutors and agents that this is a priority for us," said Justice Department spokesman Peter Carr.
The unit has worked on high-profile cases, including one resolved in 2012 against HSBC, which entered into a $1.9 billion settlement and admitted anti-money laundering failures that allowed drug cartels to wash hundreds of millions of dollars.
In another case, payment transfer company MoneyGram International agreed in November 2012 to forfeit $100 million and admitted it aided in wire fraud and failed to maintain an effective anti-money laundering program in violation of the BSA.
The anti-money laundering unit has also successfully pursued smaller targets, including check-cashing firms in New York.