The Trump Administration cannot seem to make up its mind about whether to be serious about prosecuting banks and other financial entities for failing to fully live up to their responsibilities to deter money laundering.
Last year, after Trump returned to office, there were no announcements of resolved anti-money-laundering deficiency (AML) cases against banks. There were two big settlements with cryptocurrency firms—Peken Global and OKX—but these were the result of investigations begun under Biden. During the first half of this year, there were only a handful of AML case resolutions, all of modest size.
Things started to change in August, when federal regulators announced they were fining the Swiss bank UBS for failing to adequately monitor its customers’ foreign exchange transactions. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) called its $125 million penalty “historic,” noting it was the largest fine it had ever imposed on a broker-dealer.
Arguably, the amount should have been even higher, given that UBS was a repeat offender. In 2018 the company was fined $14.5 million for AML deficiencies. Moreover, in both cases the impact of the FinCEN penalties was substantially lessened when the agency agreed to reduce UBS’s payment obligation by the amounts it paid to other agencies for related cases. This year, that discount amounted to $48 million; in 2018 the reduction was $9.5 million.
The UBS case has now been overshadowed by FinCEN’s announcement that it is fining Bank of America $1.2 billion for violations of both AML regulations and economic sanctions laws. Treasury boasts that this is the third largest penalty in the department’s history. The Office of the Comptroller of the Currency, a branch of Treasury, also fined Bank of America $750 million, but that amount was deducted from the FinCEN penalty.
Bank of America’s case is not a purely AML matter. It focuses on the failure to report suspicious transactions said to be “indicative of Chinese Money Laundering Networks” and “trade-based money laundering with a substantial nexus to the southwest border.” It apparently was not enough for the AML deficiencies to involve the usual concerns of narcotics and terrorism. What may have been what got the White House to approve a rare crackdown on a major U.S. corporation was the link to Trump’s favorite issues of immigration and trade.
Along with the Bank of America case, the OCC and the Federal Reserve recently announced a $350 million penalty against American Express for what was called “systemic breakdowns in its suspicious activity monitoring and reporting processes, resulting in a failure to timely identify, evaluate, and sufficiently report approximately $13 billion of suspected trade-based money laundering activity that took place over the past decade.”
It is unclear whether the surge in AML enforcement is simply another way the Trump Administration is trying to sway voters in advance of the mid-term elections. Yet, such a ploy is unlikely to work. The DOJ and numerous federal regulatory agencies have already demonstrated their support for misbehaving companies by dropping investigations, abolishing regulations, and weakening enforcement. Even AI slop cannot conjure up a convincing image of Donald Trump as a corporate crime fighter.
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