Recently, Standard Chartered Bank has been forced to pay a large fine of $340 million to the state of New York for allegedly laundering money to Iran over a time period of seven years. The state of New York's action in this case raises the question of the appropriateness of a state's prosecuting these particular felonies. Federal authorities had the information necessary to prosecute the bank for five years, but they did not act before the state authorities did.
The action by the state of New York effectively sets a bare minimum for the fine that the federal government will seek, as it is highly unlikely that federal authorities at the U.S. Treasury and elsewhere will desire a lesser penalty than that sought by the state authorities.
According to one estimate, the federal penalty will be at least $360 million, making the combined penalty one of the largest ever assessed for money laundering charges. Some speculate that federal officials did not act earlier because they were tracking money laundering allegations against the bank with other countries subject to sanctions.
Money laundering consists of the act of filtering funds obtained from illegal activities through a series of financial transactions in an attempt to make the money appear to have been obtained through legal means. This sort of activity usually involves three steps. The money is first deposited in a bank or brokerage, and is then separated from its illegal source through a series of complicated transactions. Finally, the money is mixed with legally obtained money, typically through the purchase or sale of assets.
Being convicted of money laundering carries severe penalties under both state and federal law. The penalties may include a hefty jail sentence in addition to fines assessed against the defendant. Anyone accused of involvement in this kind of white collar crime will want to have a solid understanding of his or her rights as a defendant.
Source: The Christian Science Monitor, "Standard Chartered Money-Laundering Deal: Did New York Jump the Gun?" Ron Scherer, Aug. 15, 2012