Bank of America fined for lax money laundering controls

WASHINGTON (AFP) – The NASD securities watchdog said it had fined Bank of America Investment Services, Inc. three million dollars for failing to comply with US government anti-money laundering laws.

NASD spokesman Herb Perone said the fine was the largest ever to be levied against a broker-dealer under US anti-money laundering rules.

The fine related to offshore accounts held on the Isle of Man, a well-known tax haven.

“BAI fundamentally failed to meet its obligations with these high risk accounts by failing to adequately investigate and pursue red flags, especially in the face of repeated requests for additional information about the account holders from its own clearing firm,” James Shorris, the NASD’s head of enforcement, said in a statement.

The industry regulator said Bank of America Investment Services (BAI), a unit of US banking giant Bank of America, had “failed to obtain required additional customer information” with regard to 34 accounts.

“Bank of America cooperated fully with the NASD on this matter and we are pleased to resolve it,” Bank of America said in a statement.

“Bank of America takes very seriously its regulatory obligations to know its customers and assist regulators in the fight against money laundering, fraud and other illegal activity,” the bank said.

The 34 accounts in question were tied to trust and private investment corporations registered on the Isle of Man, a small island that sits between Britain and Ireland in the Irish Sea, and apparently affiliated with one family, the NASD said in a statement.

Between 79 million and 93 million dollars were held in the offshore accounts from which multi-million dollar wire transfers were made across international boundaries in recent years.

The NASD said BAI allowed the account holders to engage in “multi-million dollar wire transactions” even though it did not have complete ownership details for the accounts, and despite a senior BAI lawyer urging the identification of the accounts’ beneficial owners.

A source, who requested anonymity, told AFP the family who ultimately controlled the accounts were wealthy Texas-based real estate investors.

A report released by the US Senate’s subcommittee on investigations last year claimed that several US-based billionaires had funnelled hundreds of millions of dollars to the Isle of Man and tiny Caribbean islands in recent years.

Senate investigators found that offshore entities registered on the Isle of Man by some of the billionaires had avoided filing US tax returns to the IRS. Lawmakers said at the time that some of the billionaires’ transactions were designed to dodge US taxes and that the Justice Department was probing some of the money flows.

The Washington-based NASD is the chief industry regulator for US broker-dealer firms.