A top Justice Department prosecutor said the U.S. is prepared to punish banks for violating criminal settlements, an unprecedented move designed to crack down on repeat offenders.
Leslie Caldwell, the head of the Justice Department's criminal division, said in a speech Monday she won't hesitate to tear up settlements known as deferred- and non-prosecution agreements that resolved investigations in exchange for banks' cooperation in other probes. Doing so would lead to charges for past misconduct, she said.
"Where a bank that violates a DPA or NPA is a repeat offender with a history of misconduct, or where a violating bank fails to cooperate with an investigation or drags its feet, that bank will face criminal consequences for its breach of the agreement," Caldwell said during her speech at an anti-money- laundering conference in Florida.
A decision to revoke a non- or deferred-prosecution agreement and charge a bank would be a first. The Justice Department has relied on these deals to resolve investigations into wrongdoing in the financial sector including money laundering and interest-rate rigging.
Caldwell's remarks come as the Justice Department is conducting settlement discussions with global banks under investigation for manipulating currency markets.
UBS Group AG, Royal Bank of Scotland Group Plc, Barclays Plc and HSBC Holdings Plc are among the banks that have reached such agreements with the Justice Department and are now under investigation in the currency-rigging affair.
Caldwell said that when an agreement is breached, the department can impose additional monetary penalties and can file charges based on the conduct covered by the agreement.
Those agreements "can't be ignored once they're signed, and they can't be followed partially," Caldwell said.