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The Department of Justice is looking into whether the two dozen banks that facilitated bribes allegedly paid to FIFA officials knew they were doing so. The case is also a test of how much liability banks have over illegal payments they allow.
May 28 -
Discover Financial Services has entered into a written agreement with the Federal Reserve to improve its anti-money laundering procedures.
May 28 -
The Fed finalized a rule increasing an asset-size threshold that lets smaller banks finance deals with up to 75% in debt. That benefit, along with an exemption from Basel III capital rules, could prompt some bankers to second-guess short-term growth as they weigh their options.
May 29
The structuring law that former U.S. House Speaker Dennis Hastert stands accused of violating highlights how federal prosecutors use the banking system as leverage.
Hastert, a former representative from Illinois who served in the U.S. House of Representatives from 1981 through 2007, is accused of one count of structuring transactions to be lower than needed so as to evade Currency transaction reports, a method used by the government to detect money laundering or tax evasion. Currency transaction reports are required for transactions of more than $10,000.
The provision against so-called structured transactions, commonly referred to as "smurfing," because it involves a series of smaller transactions to elude governmental scrutiny is most typically "used for tax avoidance purposes," according to Peter Skinner, a former assistant U.S. attorney.
"If you're structuring transactions in a way to avoid filing, that is a crime," said Skinner, who led several prosecutions for New York's Southern District Office involving money laundering by drug cartels and terrorists prior to becoming a partner at the Manhattan law firm of Boies, Schiller & Flexner.
Smurfing "often comes into effect the other way, with money going into the banking system," Skinner said. "The structuring laws don't get charged as often as other money laundering," Skinner added, because the penalties aren't as severe.
It's one more unusual aspect of a case that is already strange, as Hastert allegedly used the money he withdrew to pay off blackmail for alleged sexual improprieties from his time as a coach and gym teacher before taking office.
Hastert appears to have first tripped the federal anti-money-laundering apparatus when he made 15 $50,000 withdrawals from several banks, which prompted questions from bank officials required to ask about the transactions by law.
This created the appearance of smurfing because, the indictment says, roughly three months after bank officials questioned him in 2012, Hastert began making withdrawals of less than $10,000, which federal prosecutors believe was for incremental payments towards extortion.
The Internal Revenue Service began investigating Hastert in 2013 because his transaction patterns raised suspicions. In all Hastert made at least 106 withdrawals totaling $952,000 between July 2012, and Dec. 6, 2014.
When the FBI asked him why he made the withdrawals, Hastert said he'd lost trust in the banking system.
"Yeah ... I kept the cash. That's what I'm doing," the indictment alleges Hastert to have said during questioning, leading to his other charge for allegedly lying to federal agents.
