Bank of New York Co may pay $24 million to avoid a possible criminal indictment for failing to report suspicious activity at a branch, the latest sign of the US government's effort to stop money laundering, The Wall Street Journal said on Tuesday.
The New York-based banking company is in talks with the US Attorney for the Eastern District of New York to pay the penalty, co-operate with prosecutors and agree to independent monitoring of its compliance program, people familiar with the matter told the newspaper.
Bank of New York spokesman Jeep Bryant declined to comment.
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 Wall Street Journal said RW secured large loans, telling its lenders they would be repaid with leasing revenue that went into escrow accounts at the bank.
The newspaper said, however, that about $92 million in loan proceeds was deposited into one bank account, and at least $28 million was diverted to RW's owners. Prosecutors said Bank of New York should have noticed the suspicious activity and filed reports with regulators because of the large sums of money involved, the newspaper said.
Bank of New York, which runs the oldest US bank, had in its third-quarter report said it was reviewing a settlement proposal from the US Attorney.
Brian Bedell, a Merrill Lynch analyst who rates Bank of New York shares at "buy," said a $24 million payment, if made in the fourth quarter, would reduce the bank's profit by 2 cents to 3 cents per share.
Analysts polled by Reuters Estimates on average forecast fourth-quarter profit of 48 cents per share.
Bank of New York shares fell 30 cents, or 0.9 percent, to $32.69 in morning New York Stock Exchange trading.
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