4 Big N.Y. Banks Fined for Failing to Report Overseas Cash Deals

The Treasury Department fined four big New York banks nearly $1.2 million Tuesday for failure to report cash transactions in what a federal official termed a reflection of widespread failure to take the Bank Secrecy Act seriously.

John M. Walker Jr., assistant Treasury secretary for enforcement and operations, said that between 40 and 50 other banks had reported making similar transgressions and that the Internal Revenue Service was investigating 140 banks for possible criminal violations.

Walker said there was “some overlap” between those who came forward voluntarily and those the IRS was investigating on its own, but he declined to speculate on the outcome of any of those cases.

“We are seeing a problem in which the banking industry as a whole couldn’t be given more than a C-plus,” said Walker, citing the failures of bank managers to give high enough priority to the cash reporting law.

But he said that was changing in the wake of a criminal investigation in which First National Bank of Boston pleaded guilty earlier this year to felony charges of failing to report $1.22 billion in cash transfers with Swiss banks and was fined $500,000.

Walker said he had written to the chief executive of every bank in the United States to underscore the government’s determination to enforce the law.

The four New York banks fined Tuesday voluntarily disclosed the unreported cash transactions to the Treasury Department after the Bank of Boston case prompted bank officers across the nation to take a look at their own compliance, Walker said.

Chase Manhattan Bank was fined $360,000 for 1,442 reporting failures involving more than $852 million; Manufacturers Hanover Trust, $320,000 for 1,393 transactions involving nearly $140 million; Irving Trust, $295,000 for 1,242 transactions involving nearly $310 million, and Chemical Bank, $210,000 for 857 transactions involving nearly $26 million.

All of the banks had made public the results of their internal reviews when they sent the information to the Treasury Department.

The civil penalties could have been four times as large under the law, but Walker said his investigation concluded that the violations resulted from “individuals not being attentive to following procedures.”

“What we’re saying is they weren’t intentional mistakes. We do not see evidence of intent to launder money that would warrant a criminal prosecution,” he said.

At the same time, he said, “we were not about to give amnesty” just because the banks came forward voluntarily.

Walker said the four banks were following the law so far as individual tellers filling out reports on cash transactions of $10,000 or more at their windows. The breakdown, he said, was in reports on international transactions.

The violations that led to the penalties announced Tuesday generally involved large transactions with other international banks, and the blame rested with people at the vice-presidential and compliance-officer level who did not give a high enough priority to seeing that the proper reporting was done, Walker said.

Questioned about the decision not to hold individual bank officers personally accountable for the violations, he said that “lack of training of employees is not something we’re going to jail people for in this country.”