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N.Y. bank allowed laundering
NEW YORK (CNN) -- A Manhattan bank pleaded guilty Wednesday to enabling drug traffickers to move more than $120 million in bulk cash through the bank without alerting authorities, thanks to lax policies that made it "the bank of choice" among drug traffickers. Broadway National Bank pleaded guilty to three felony charges of not reporting suspicious bank activity between 1996 and 1998. The case marks the first prosecution of a bank for failing to establish an anti-money laundering program, as is required by law, and failing to file "suspicious activity reports," or SARs. The bank was ordered to pay a $4 million fine. James Comey, the U.S. attorney for the Southern District of New York, said Broadway "flagrantly" disregarded the law and is now paying the price. "We will aggressively pursue banks that do nothing to prevent or to respond to money laundering and structuring," he said. According to prosecutors, one customer working for a Colombian drug cartel sent a runner who routinely dropped off duffel bags full of cash -- typically in amounts of $178,000 -- at the bank from January 1996 to 1998. One deposit totaled $660,645. There were about 250 such transactions, worth about $46 million, by the same runner. On most days, the runner wouldn't wait around for the cash to be counted and instead would return the next day to pick up his duffel bag, according to court papers filed by prosecutors. The runner was working for Alfred Dauber, who has since pleaded guilty to laundering money at the bank. One executive, the court filings say, advised colleagues against inviting Dauber to the annual Christmas party, saying, "For all we know, Dauber is a drug dealer." Prosecutors also said the bank would routinely allow cash deposits just under $10,000, the trigger level for required federal reports, and that it allowed customers to structure about $76 million with the intent of evading detection. The money was often immediately wired to Latin America and the Middle East, including to several notorious money laundering havens. One family illegally structured $20 million in cash deposits; five of those family members have since been convicted of depositing drug money at the bank. Under the Bank Secrecy Act, banks are required to develop internal procedures and controls to prevent money laundering and to alert the Treasury Department about suspicious financial transactions. As part of the anti-money laundering programs, banks must file currency transaction reports for cash transactions of more than $10,000. A bank is also to closely monitor when a customer makes several deposits around $10,000. "Broadway National Bank utterly failed to implement any program at all, let alone an effective one, with the dire result that approximately $123 million in narcotics proceeds was laundered through the bank," Comey said.
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