Now that's what I call an expensive press release.

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It was the late, great Ronald Reagan who said "The most terrifying words in the English language are: I'm from the government and I'm here to help. "



Somebody form the US Department of Justice (DoJ) should have been paying attention and here is why.



When it gets to classic, large scale eye wateringly expensive money laundering scams that can crucify bank's then the Bank of New York (BoNY) scam in the early 1990's comes pretty close to the top of the list!


BoNY admitted that a rogue employee laundered $7.5 billion from Russia through the bank in the 1990s. However, it had not admitted criminal wrongdoing when it reached a $14 million non-prosecution settlement with the American government in 2005.



According to the New York Times, the Justice Department then issued an incorrectly worded press release that announced not only the settlement but also that the bank had admitted guilt. At which point lawyers for the Russian government seized upon as the basis for their own lawsuit. And that's what appears to be close to settlement (according to the paper on September 16th 2009).

Details of what appears to be a a $400 million trade-finance facility to be available to Russian state banks to help fund imports and exports by BoNY would appear to be on the table. Renewable every 180 days, it would run for five years on very favourable terms. Apparently this good will gesture is totally unrelated to the Russian Federation dropping the lawsuit and BoNY paying $14 million to the Russian government for legal fees incurred.

But, dear reader, the points I want to make about this case are as follows:

• The true cost of a major money laundering case can be measured in years of management time
• Your firm's reputation can be almost permanently linked to the incident
• Once it has gone public, you are no longer in control of who takes an interest in what you did or didn't do
• Government Department's can sometimes make everything much worse!

And that's why, boys and girls you make damn sure your expensive complex and ever changing AML systems actually work BEFORE it all goes pear shaped.

Related articles by Zemanta

• Bank of New York Settles a Protracted Russian Lawsuit (nytimes.com)


• Russia, BONY to Sign Settlement (abcnews.go.com)

Birkenfeld Gets 40 Months in jail

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The Washington post has reported that Bradley C. Birkenfeld, a former banker for Swiss banking giant UBS and who helped U.S. officials uncover billions of dollars in taxpayer money in secret bank accounts was sentenced on the 21st August 2009.

He pleaded guilty last year to the criminal charge of assisting UBS (and some of its US clients) evade the USA’s tax collectors, the Internal Revenue Service. As he is still helping the authorities with their enquiries, he will start his term on 8th January 2010.

Mr Birkenfeld had asked to be sentenced only to probation, federal prosecutors had asked that he be given 30 months but in the end a federal judge gave him 40 months. The sentence does leave me wondering about whether the Judge accepted his motivation for blowing the whistle as being entirely pure?