discount bank officials.
(photo credit: Discount Bank press release)
Israel Discount Bank of New York has agreed to pay up to $25 million to settle state and federal claims that it allowed illegal Brazilian money transmitters to move $2.2 billion through its offices over the past five years.
The IDB account of an illegal Brazilian money transmitter, Transmar Tourismo Ltda., was frozen in New York, Assistant District Attorney Daniel Castleman said Friday in announcing the agreement. Castleman said the account contained $158,000.
Brazilian police also searched Transmar's Sao Paulo offices, seized records and arrested three employees on Brazilian charges.
The IDB settlement followed a probe by the state Banking Department, the Manhattan district attorney's office and federal bank regulators.
Castleman said investigators didn't know who the money belonged to, or where it was going. They learned of the suspicious money transfers to IDB through leads developed while investigating another case in 2004.
"They're supposed to report suspicious activity," Castleman said. "They were not living up to their anti-moneylaundering responsibilities."
Mallory Stevens, senior vice president of Israel Discount Bank of New York, reportedly announced Nov. 30 that the bank was talking to state authorities about alleged "deficiencies" in their anti-moneylaundering controls.
Stevens was not immediately available for comment Friday.
The IDB settlement calls for the bank to pay $8.5 million to the city and state to cover investigation costs. The bank could face additional civil penalties of up to $16.5 million to be paid to the state Banking Department, the U.S. Treasury Department's enforcement agency, and the Federal Deposit Insurance Corp. (FDIC).
The settlement has three parts: the cooperation agreement with the district attorney that allows the bank to avoid prosecution if it lives up to all of its agreements, and two parallel cease and desist agreements with the state Banking Department and the FDIC.