海角大神

Normally, there is a pecking order when it comes to prosecuting crimes of international finance: local officials defer to state law enforcement, who defer to the feds, who are usually the big bird on the perch.

But that鈥檚 not how it鈥檚 worked in the case of Standard Chartered Bank. The bank is paying a聽$340 million penalty to the state of New York, which threatened to revoke its license over charges that the bank laundered聽money to Iran over a seven-year period.

New York's actions prompt questions about why federal officials, who聽have been looking at the same information for the past five years, did not act sooner 鈥� and whether New York has damaged its relationship with the federal government by going first. Indeed, the聽agreement could force the federal government's hand, and the US Treasury may not want to accept less money than the state of New York.

鈥淚 think they will take action, but they won鈥檛 do it with a smile on their faces,鈥� says Jimmy Gurul茅, a former undersecretary for enforcement at the US Treasury, now a professor of law at Notre Dame University in South Bend, Ind. 鈥淭he optics of this will look very bad if the state takes action and the Feds do not.鈥�

As far as the potential penalty federal officials might want,聽鈥渢he settlement by the state establishes a floor,鈥� says Anthony Michael Sabino, a professor at St. John鈥檚 University in New York. 鈥淭hey will probably want an amount north of that.鈥�

Mr. Gurul茅 says he has heard one estimate of a potential fine as large as $360 million. If true, it would make the combined state and federal fines the largest sanction ever imposed for not complying with anti-money laundering regulations. Currently, the largest amount paid by a bank is $619 million paid by Dutch bank ING in June for laundering money for Iranian and Cuban clients.

In almost all such cases examined by the government, banks try to hide their clients鈥� identities. They do this by stripping the name of their clients from their electronic communications when they move money through their US subsidiary. While that is not illegal, it means the US subsidiary can not determine if the transaction is illegal, as is required by US law. And, it means that US regulators also can not tell if the transaction is legal.聽

There are several potential reason why the US government has not yet acted.聽

A July US Senate report looking at money-laundering violations by HSBC found that the investigation process was convoluted and cumbersome. Federal regulators did not treat the violations as serious breaches, and regulators were too differential and willing to give banks more time to correct their deficiencies, says聽Gurul茅, whose oversight included the Office of Foreign Assets Control, responsible for enforcing US economic sanctions.聽

But the documents in the New York case also included a footnote聽indicating the bank may have laundered money for other countries under sanctions. 鈥淭hat might be another reason the feds were slower 鈥� they might have wanted to sweep those violations in as well,鈥� says Gurul茅.

A third possibility is that Benjamin Lawsky, head of New York's聽Department of Financial Services 鈥� which has been up and running for less than a year 鈥� doesn't play by the traditional rules. He聽is聽a former federal prosecutor, not a former banker.

鈥淗e takes a different view, he is less deferential,鈥� says Gurul茅. After five years of investigation, he says, 鈥淚 think he reached the conclusion, enough is enough, I鈥檓 tired of waiting.鈥�

While that may be beneficial for New York in the short run, Professor Sabino of St. John's wonders if Mr. Lawsky may have burned some bridges.

鈥淟awsky has ruffled some feathers,鈥� he says. 鈥淭he feds may not want to cooperate with him in the future, and when it comes to financial regulation, cooperation is paramount.鈥�

Although the violations are also being investigated by both the Manhattan District Attorney and Department of Justice, it would be unusual for either of them to bring a criminal case.

So far, the federal government has found five banks that have illegally laundered money. 鈥淣ot one bank official has been criminally prosecuted,鈥� says Gurul茅. 鈥淚t makes me wonder if the banks have gone from too big to fail to too big to prosecute.鈥�