Bank of New York is in talks with Federal prosecutors about paying a $24 million penalty in order avoid a criminal indictment on charges of failing to report suspicious activity at a branch, according to a report in the Wall Street Journal on Tuesday. Suspicious activity covers money laundering, fraud and other financial crimes.
According to the report, the bank is in discussions with the US Attorney for the Eastern District of New York to pay the penalty, cooperate with prosecutors and agree to independent monitoring of its compliance policies.
The case concerns RW Professional Leasing Services Corp., which arranges financing when health care providers want to lease medical equipment, and Myrna Katz, a Bank of New York branch manager who has been indicted for bank and wire fraud.
The Journal reported that RW Leasing secured large loans, telling its lenders they would be repaid with leasing revenue that went into escrow accounts at the Bank of New York. It also reported that, instead, about $92 million in loan proceeds were deposited into one account at the Bank of New York and at least $28 million was diverted to RW Leasing’s owners.
Because of the large amounts of money involved, says the Wall Street Journal, prosecutors in the case are saying the bank should have noticed suspicious activity and filed reports with regulators.