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As AML Expectations Grow for Banks, So Do Civil Liabilities

By Colby Adams

An expected U.S. Treasury Department regulation aimed at improving corporate transparency may do more than task banks with additional recordkeeping. It could also expose financial institutions to greater civil liability when compliance goes wrong. In recent years, victims of Ponzi schemes and other frauds have increasingly sought compensation through lawsuits against banks over ostensible lapses in anti-money laundering (AML) controls that purportedly allowed the crimes. The plaintiffs have cited know-your-customer data, employee e-mails and other internal records to win, in some cases, hundreds of millions of dollars. The department's proposed customer due diligence rule would require banks to collect and...

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