‘Rarely Used’ Provision of U.S. Laundering Law a Top Concern for Financial Institutions

By Brian Monroe

Senior banking executives and compliance officers have lost a great deal of sleep in recent months over a provision of U.S. money laundering law that allows federal prosecutors to seek stiff civil money penalties. The measure, Title 18 USC Sec. 1956(b), is rarely used but has been invoked by the Justice Department in some high-profile cases in recent months. In October, for example, federal prosecutors said they will seek nearly $300 million from Lloyds TSB Bank PLC and Bank of Cyprus, charging that the two foreign-based institutions helped to launder the proceeds of a massive securities fraud. The civil provision...