Corp-Ethics.com - Report: New York bank settles fraud case

Company	Bank of New York [Company Info]
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Date	Issue	Title
8th Nov 2005	Fraud Investigation	New York bank settles fraud case

Report

The oldest bank in the US, the Bank of New York, has agreed to pay $38m (£21m) to resolve long-running fraud and money-laundering investigations.

The bank will forfeit $26m to the government and pay $12m to victims of the fraud, prosecutors said.

The case dates back to 1999, when two of bank employees helped launder $7bn from Russia through several accounts.

One key employee, senior executive Lucy Edwards, admitted accepting bribes from Russian gangsters to set up accounts.

Regulators have stepped up their probes on internal bank account controls after the September 11, 2001 terrorist attacks.

Prosecutors said they would not pursue the bank for failing to enforce anti-money laundering measures and other banking rules.

This was despite the bank admitting it had deceived federal regulators by failing to disclose evidence of crimes by customers and employees.

The bank has now agreed to internal reforms and will be monitored by an independent examiner.

Officials at the Bank of New York, founded in 1784, said they had already implemented many of the reforms.

"We are satisfied that reaching this agreement is in the best interest of the company and all our constituents," said Thomas A Renyi, chairman and chief executive of the bank.

"We are taking the right steps in today's environment to ensure sound business practices."

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