By “Cooperative Investigations” Does WSJ Mean “Protection Money”?

The WSJ has a funny response to the Standard Chartered Bank settlement. Aside from the predictable claims that Benjamin Lawsky, the NY Superintendent of Financial Services, played hardball to advance his political career, it suggests Lawsky upset a system of “cooperative investigations” that NYC’s District Attorney has in place.

These columns have long supported tough enforcement of Iran sanctions, including efforts by the Manhattan District Attorney and U.S. Treasury against foreign banks. The D.A.’s office has sanctioned four banks in recent years, extracting $1.8 billion in settlements and defining new standards of behavior.

Other cooperative investigations have long been underway, and Mr. Lawsky’s main contribution seems to have been to jump the queue so he could get a big publicity score. He told the D.A.’s office he was going public the night before his announcement and he only told the feds on the same day.

This seems to be the central pique of the editorial. Lawsky “jumped the queue,” which sounds an awful like a queue of regulators in line to get payouts from banks so they can look the other way from money laundering. Is that the problem here? Lawsky violated the DA’s turf, and took what the DA believed was his office’s rightful payment, and oh by the way also exposed the underlying Get Out of Jail Free industry that seems to be the service for which the DA and other regulators have gotten these payments in the past?

Are all the attacks on Lawsky about him taking fines that other regulators had planned on receiving? About money going to NY state, rather than NYC?

Mind you, to paint this as a “cooperative investigation,” the WSJ has to ignore several facts.

  • SCB did not, as WSJ claims, rat itself out to regulators in 2010. On the contrary, in early 2009, law enforcement authorities came to it.
  • Much of the underlying fraud (which WSJ seems to believe is not illegal) happened at a time when SCB was operating under a Written Agreement mandating certain behaviors because of past money laundering violations. Indeed, SCB lied to regulators about its Iranian transactions to get the Written Agreement lifted in 2006.
  • SCB has moved all its Office of Foreign Asset Controls compliance to Chennai and–as with its past efforts to evade regulations–the Chennai office does not communicate on these issues with the NY office. Moreover, SCB’s process still seems to allow for the same methods to process transactions of sanctioned individuals.

Of course, had WSJ admitted to these facts, it would have had to acknowledge that the “new standards of behavior” the DA’s office has put in place includes ongoing efforts to evade money laundering laws.

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9 Responses to By “Cooperative Investigations” Does WSJ Mean “Protection Money”?

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bmaz There has never been a performance like---> The Great Flydini
emptywheel @RadioFreeTom I'm REALLY sorry if I'm not obsessed with making Snowden scapegoat for other failures. That I won't do. That's your schtick.
emptywheel @RadioFreeTom The answer is if you're serious abt fighting ISIL you'd do well to focus on the things that helped ISIL far more.
emptywheel @RadioFreeTom You BADLY want Snowden to be the one thing that helped ISIL when if he did, he is so far down the list as to be distraction.
emptywheel @RadioFreeTom I believe I've answered that ~5 times now. With WAY too much complexity for you, I know. But sorry, you'll get same answer.
emptywheel @RadioFreeTom Thanks for admitting! It would help you move beyond it if you didn't misstate what I said and overgeneralize what Morrell did.
emptywheel @RadioFreeTom Yes. Apparently you are. Bc you keep misstating both what morrell said and what I said. It's pretty lame, actually.
emptywheel @RadioFreeTom Morrell's claim was more specific than that, or don't you care? @robertcaruso
emptywheel @RadioFreeTom This is about 5th time you've misrepresented that. Bc you have SUCH A DESIRE, provenance nothwithstanding, to have this.
emptywheel @RadioFreeTom No. I was ONLY ever talking abt Morrell's claim, bc PRB approval. Then YOU claimed I was saying more. @robertcaruso
emptywheel @RadioFreeTom And I find those SPECIFIC claims laughable, bc ISIL already had many routes to know that. @robertcaruso
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