Israel Discount Bank (TASE: DSCT) estimates that the overall cost of the money laundering affair at its subsidiary, Israel Discount Bank of New York, will reach $41-45 million, spread over 2005-07.
Under the 2005 settlement between Discount Bank New York and the New York State banking and US federal authorities, the bank will pay the New York State Department of Banking and the Federal Deposit Insurance Corporation (FDIC) $16.5 million. The bank allocated an additional $16.1 million in 2006 for expenses related to the investigation at the bank and administrative changes to comply with regulatory guidelines. These costs totaled $2.3 million for the first quarter of 2007, and Discount Bank estimates that they will cost an additional $6-10 million over the rest of the year.
Discount Bank New York was found to have laundered $2.2 billion in funds deposited from South America between 2000 and 2005. The New York State Department of Banking investigation also found many flaws in the bank’s money laundering monitoring and reporting procedures.
Money laundering procedures at Discount Bank Latin America, based in Uruguay, were found to be deficient, and it was fined $41,000.
As part of the settlement, Discount Bank New York hired KPMG to prepare an enforcement plan and audit the bank as mandated.
Published by Globes [online], Israel business news - www.globes.co.il - on May 30, 2007
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