ON APRIL 23, 2012 IN LATEST BANK NEWS

http://www.loansafe.org/money-laundering-tough-for-banks-to-track

(Source: By Richard Newman The Record (Hackensack N.J.) (MCT) — Banks are required by the federal governmentto pay close attention to suspicious cash transactions that may be evidence of illegal activity such as drug dealing, theft, prostitution or financing of terrorism. But detection of money laundering can be much more difficult when an employee assists the bad guys, banking experts say.

Such may have been the case at Bank of New Jersey, where a 22-year-old assistant branch manager at the main Fort Lee, N.J., office was accused this month of helping members of an alleged pot distribution ring convert small bills into large ones for easier transport.

Anthony Alberga of Cliffside Park, N.J., who faces money-laundering charges, was fired last week for not logging the cash transactions as required under the bank’s policies and procedures. Two tellers who were not charged with crimes were also fired for not bringing suspicious transactions to the attention of upper management.

“When you have collusion, you can’t stop it from happening because you are not over them 100 percent of the time,” said bank consultant Nicholas Ketcha, a former director of supervision for the Federal Deposit Insurance Corp. and a managing director of FinPro Inc., a bank management consulting firm.

Bergen County Prosecutor John Molinelli has described Matthew Martin, 43, and Danny Saleh, 34, both of Edgewater, N.J., as “high-level” distributors of marijuana they obtained in California. Lawyer Marcanton Macri, who has been suspended from his job as a municipal prosecutor for North Bergen, N.J., was charged with money laundering and financial facilitation for allegedly introducing Martin and Saleh to Alberga, Molinelli said.

Industry experts say the type of money laundering alleged in the case is known in the business as “structuring,” which involves breaking transactions into smaller amounts to avoid triggering the government’s reporting requirements.

“I wouldn’t call it common, but it’s certainly not unknown,” said John Atkinson, the director of regulatory risk consulting at the Atlanta office of consulting agency Protiviti Inc. and a former bank supervisor at the Federal Reserve Bank of Atlanta.

Structuring can be difficult for bank management to detect, even if the institution has strong anti-money laundering compliance procedures in place, he said.

Banks can safeguard against it by making sure everybody knows there are rules that have to be followed, what those rules are and what the consequences are for not following them, Atkinson said. “A culture of compliance and ethics is paramount,” he said.

Most banks have computerized systems to track cash transactions and identify those that are suspicious, he noted, but a rogue employee can sometimes defeat those systems.

The Money Laundering Control Act of 1986 made money laundering a criminal offense with penalties of up to 20 years in jail and fines up to $500,000 for each count.

And since the 9/11 terrorist attacks, oversight of banks’ money laundering controls has been more intense,” said Ketcha, the former FDIC supervisor.

All banks have appointed a Bank Secrecy Act officer, charged with ensuring anti-money laundering rules are followed, Ketcha said.

“They are required to train any new people on procedures including how to determine if there is structuring going on, when they have to file (cash transaction) reports, and what constitutes suspicious activity,” Ketcha said.

“They have to make sure know-your-customer rules are followed,” Ketcha said.

“It’s very much a front-burner issue for banks of all sizes,” Atkinson said. “For smaller banks, it’s a little bit tougher because they don’t always have the depth of resources or expertise to manage those risks.”

As a result of the incident, Bank of New Jersey “will probably receive more regulatory scrutiny to find out what happened and why this was not detected,” Atkinson said.

They may be forced to take actions to beef up controls, add new systems or add more personnel to handle new duties or to segregate duties, he said.

“The bottom line is, it winds up costing them more money.”

Depending on how long the problem went on and the amount of money involved, the bank could be fined or face other administrative sanctions, Atkinson said.

Albert F. Buzzetti, chairman and chief executive officer of the bank, said it has reported the circumstances of the firings of Alberga and the tellers to the FDIC, the bank’s primary federal regulator.

“The FDIC thanked us for notifying them,” he said last week.

Regulators have declined to comment in the wake of the arrest of Alberga. But Buzzetti said he does not expect that they will reexamine the bank’s anti-money laundering controls and procedures because of the incident.

“Our controls are excellent. There is nothing more to do,” he said.

“If somebody really wants to break the law, there is not much you can do unless you stand over every teller for every transaction,” he said. “That’s impossible.”

Meanwhile, on Thursday Saleh’s attorney, Brian Neary, said his client has waived his first appearance and that there is no court hearing scheduled. Saleh has been charged with conspiracy to distribute marijuana with intent to distribute, possession of marijuana with intent to distribute, and criminal facilitation.