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Treasury Fines Security Pacific and Wells Fargo

May 23, 1986|JOHN M. BRODER | Times Staff Writer

Federal authorities, in a continuing effort to stem the laundering of illicit funds, fined two big California banks Thursday for failure to report large cash transactions.

The Treasury Department said Security Pacific National Bank of Los Angeles agreed to pay a civil penalty of $605,000 for more than 2,400 violations of the Bank Secrecy Act, which requires banks to report most cash deposits or withdrawals exceeding $10,000.

Wells Fargo Bank of San Francisco agreed to pay $75,000 for failing to report more than 300 such transactions.

Treasury officials said they had uncovered no evidence that either bank had engaged in criminal activities in connection with the violations and that both banks had cooperated fully in the investigation.

Thursday's actions brought to 18 the number of U.S. banks fined under the 1970 law, which was enacted to give law enforcement authorities a tool to trace large sums of cash generated by drug dealing, prostitution, weapons smuggling and other illegal activities.

Cooperated With Authorities

The current record fine was assessed earlier this year against Bank of America, which paid $4.75 million for about 17,000 violations of the law. Crocker Bank was fined $2.2 million last year for 7,877 violations.

Of the major California banks, only First Interstate has not been cited, but a spokesman for the bank said Thursday that it is negotiating the matter with Treasury officials.

Officials at both Security Pacific and Wells Fargo said they had cooperated with federal authorities and had reviewed reporting policies and procedures as a result of the violations.

Wells Fargo said its violations involved shipments of cash to Wells Fargo from foreign banks and cash transfers from its foreign exchange trading department to other currency traders. Security Pacific declined to characterize its violations.

Treasury officials have said that most violations they have found at other banks involved bank tellers who were unfamiliar with the law or businesses that were improperly exempted from reporting requirements.

Firms that regularly deal with large amounts of cash--such as supermarkets or race tracks--are not required to file the reports. But it is considered a violation of the law to exempt certain other businesses that do not customarily deal in cash.

Neither bank cited Thursday disputed the charges nor quarreled with the size of the fines.

"We feel it was a fair amount," said Lona Jupiter, a Wells Fargo spokeswoman. She added that the violations occurred between 1980 and 1985.

A Security Pacific spokeswoman said that bank's reporting errors dated back about 10 years.

In the last year, more than 60 banks have come forward voluntarily to discuss past violations.

Francis A. Keating II, assistant Treasury secretary for enforcement, said officials were encouraging other banks to come forward.

"Treasury has not yet closed the door to volunteers," he said, but he warned that "Treasury is now turning its attention to identifying banks with past violations which have not come forward to Treasury voluntarily. Such banks will be dealt with substantially more severely."

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