JPMorgan, Bank Of America Probed Over Money-Laundering Allegations: New York Times
Regulators are
investigating whether several major U.S. banks failed to monitor transactions properly,
allowing criminals to launder money, according to a New York Times story. The newspaper cited officials who it said spoke on the condition of
anonymity.The Office of the Comptroller of the Currency, the federal agency
that oversees the biggest banks, is leading the money-laundering investigation,
according to the Times. The report said the OCC could soon take action against
JPMorgan Chase & Co., and that it is also investigating Bank of America
Corp. Money laundering allows people to make money often obtained illegally
appear like it came from another source.The OCC, JPMorgan and Bank of America
declined to comment.The financial industry is struggling to mend its public
image. Four years after the financial crisis, banks are getting closer
scrutiny. And regulators are under pressure to show that they're not missing
any questionable activity.This summer, British bank Barclays PLC settled
charges that it had manipulated a key global interest rate. Standard Chartered
PLC, also based in the U.K., agreed to settle charges that it had improperly
processed money for Iran, brought by the New York Department of Financial
Services after the bank voluntarily informed regulators that it was reviewing
relevant practices. In the spring, JPMorgan surprised shareholders with an
unexpected trading loss.If the OCC takes action, it could be similar to a
cease-and-desist order that it filed against Citigroup in April. At the time,
the OCC said that Citi had deficient internal controls and anti-money
laundering procedures. In bank regulation, a cease-and-desist order doesn't
mean that a bank has to shut down, but it is a serious sanction that requires a
bank to change its practices. Citi had already told the regulator that from
2006 to 2010, it had "failed to adequately monitor" some of its
transactions connected to "foreign correspondent banking."The order
in April didn't make any new, specific accusations. But it did instruct
Citigroup to tighten its rules so it could improve compliance with the Bank
Secrecy Act and related regulations. The act requires financial institutions to
report suspicious activity and to put rules in place to try to make money
laundering impossible for customers.Last year, JPMorgan paid $88 million to
settle charges from the Treasury that it had unlawfully processed money for
Cuba, Iran, Sudan and Liberia.At the time, JPMorgan said it had had no intent
to violate regulations. It pointed out that it oversaw "hundreds of
millions of transactions and customer records per day, and annual error rates
are a tiny fraction of a percent."It's not expected that banks would be
accused of trying to show support for countries like Cuba and Iran. It's more likely
that they would be accused of faulty oversight that made any unlawful
transactions possible. The industry has maintained that such violations are
almost always unintentional.According to the Times, the Justice Department and
the Manhattan district attorney's office are also involved. The Manhattan U.S. attorney's office and
the Manhattan district attorney's office declined to comment.
Iran's Nuclear Timeline
Iran is nuclear capable. If Iran's leaders decided they wanted a
nuclear bomb, they could build one. They have the material, the technical
ability, and likely have a design. They have had these capabilities for at
least five years, when they accumulated enough raw material that could be
converted into the core of a bomb.But Iran does not have a bomb now. U.S.
intelligence officials have high confidence that Iranian leaders have not made
the decision to build a bomb. There is much confusion some of it intentionally spread about how
long it would take Iran to build a weapon.An outstanding team of seasoned
national security experts has just published a clear, detailed explanation of
Iran's nuclear timeline. The report of the Iran Project was endorsed by 34 security
leaders, including Brent Scowcroft, Sam Nunn, Gen. Tony Zinni, Adm. James
Fallon, Gen. Frank Kearney, Carla Hills, Anne Marie Slaughter, Chuck Hagel,
Adm. Joe Sestak, Jessica Mathews, Zbigniew Brezinski, Nicholas Burns and this
author.Here is an excerpt from the report (on p. 22) that provides a sound
basis for debating what actions should be taken to convince Iran not to build
nuclear weapons. This report is intentionally conservative. There may be
serious technical problems that make the timeline much longer. I have
highlighted in bold key phrases.While there are differences of opinion on this
issue, we believe it would be extremely difficult for Iran to hide a nuclear
program devoted to weapons development. No monitoring and detection system is
failure-proof, but Iran has little reason to be confident that it could get
away with creating a secret program to produce fissile material for a
weapon.Were Iran to attempt to produce a single bomb's worth of highly enriched
uranium (HEU), it would take at least one month (although some experts believe
the timeline could be as long as four months or more). It is important to note
that while the ability to build a single bomb is a somewhat useful theoretical
construct, it has little or no correspondence to how nuclear weapons programs
function in the real world.Historically, no country in the nuclear age has
sought as its goal to build one nuclear weapon; nor has any country adopted a
strategy of building one weapon knowing that as a consequence, its program
would be exposed. The timeline for producing a single bomb's worth of HEU is
subject to change, depending on the number and type of operational centrifuges
available as well as the size of Iran's stockpile of already enriched uranium,
particularly 20% enriched uranium. Conservatively, it would take Iran a year or
more to build a military-grade weapon, with at least two years or more required
to create a nuclear warhead that would be reliably deliverable by a missile.In
short, it is likely that the United States would receive some warning and have
at least a month to make a decision on action -- military or other.
Understanding the difference between the one-month timeline of producing
sufficient fissile material in order to produce a weapon, and the two-year
timeline of creating a nuclear warhead, is critical when considering the likely
success of military action.After a month, the weapons-grade uranium (WGU) could
be reduced significantly in size (25 kilograms); if properly encased, it could
be easily hidden and would be highly mobile. This would be a very hard target
to detect and destroy. While it would take some additional time for Iran to
translate the WGU into a meaningful military capability, the ability for the
United States or others to launch preventive military strikes would be reduced.
In contrast, the facility used to enrich the WGU is immobile and large and
therefore an easier and somewhat vulnerable target (unless deeply
buried)....The more apparent the decision to make a weapon, the more persuasive
the justification for military action would be to the international community,
including the United Nations Security Council. While Israel's more limited
military capabilities and earlier "red line" create a closing window
of opportunity to take military action, the U.S. could afford to wait for its
red line to be crossed Iran undertaking a dedicated weapons program before
deciding whether to take preventive military action....Given the deepening
mutual distrust between the U.S. and Iran; congressional sympathy for Israel's
perspective on a nuclear-capable Iran; and the conviction among some parties
that Iran has already secretly decided to build a nuclear weapon, we believe
the most likely military scenario is one in which preemptive, unilateral action
against Iran is initiated by the U.S. and/or Israel, under conditions of some
uncertainty about Iran's real intentions.
