There certainly has been no shortage of banking misdeeds lately, and it seems that one issue can scarcely wear out its headline welcome before another pops up to elbow it aside. From fraudclosure to shady securities, trading fiascos to LIBOR, there has been more than enough variety to sate even the most intrepid of financial-sector scandal seekers. More recently, another government investigation of dubious banking activity has come to light, this time to do with the laundering of drug and terrorists' money.
Lack of oversight may have led to involuntary processing of illegal funds
U.S. money-laundering probes of European banks have been taking place with some regularity over the past few months, but The New York Times reports that the Office of the Comptroller of the Currency, Department of Justice, and the Manhattan District Attorney have now turned their attention to some sketchy transactions between U.S. banks and foreign parties.
To put this into perspective, U.S banks have recently come under scrutiny, including JPMorgan Chase
As a result of prior inquiries, U.S. regulators and HSBC Holdings
None of the U.S. banks are being accused of deliberately dealing with sanctioned countries, or of knowingly laundering illicit funds for terrorist groups or drug cartels. What they are being accused of is ineptitude, failing to enforce and oversee their own policies meant to prevent such breaches of security. A much less serious charge, certainly, and closing loopholes now will surely provide more of a measure of protection in the future.
Meanwhile, millions of dollars will be paid to the U.S. to settle these charges -- good news for taxpayers and the safety of the banking system, but not such great news for investors, who must be growing tired not just of the non-stop cash flow out of banks to pay for incompetent and bad behavior, but also of the reputational damage all this causes.
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