HOLLYWOOD, Fla. — Bank executives rarely face money laundering charges because investigators don’t usually uncover the kind of decisive evidence needed to convict them, prosecutors said last week at an international conference in Florida.
Instead, prosecutors usually target the bank or financial institution itself. Adam Kaufmann, chief of the investigative division of the Manhattan district attorney’s office, said even then the preferred practice is to work out a settlement — known as a deferred prosecution agreement — rather than indicting the institution.
“An indictment can be a death sentence for a financial institution,” said Kaufmann, adding that ruining large banks or other institutions can trigger unforeseen economic ripple effects.
Major banks investigated for doing business with countries facing U.S. economic sanctions have reached agreements four times since January 2009. In those settlements, the institutions pay large fines and agree to meet certain requirements, but no executives face jail time. Last year, U.S. District Judge Emmett Sullivan of Washington labeled one such settlement a “sweetheart deal.” In that settlement, Barclays Bank paid $298 million in penalties but faced no charges.
“Why isn’t the government getting rough with these banks?” Sullivan said at an August 2010 hearing.
In such cases, Kaufmann said, prosecutors could have indicted lower-level employees who are actually handling the illegal transactions on a day-to-day basis. But that wouldn’t get at the executives who made the decisions — and figuring out exactly who that is can be daunting.
“It becomes very difficult to sort of identify the person you want to prosecute,” he said.