Bank of New York Co. Inc. is talking to U.S. prosecutors about paying a $24 million penalty in order avoid a criminal indictment on charges of failing to report suspicious activity at a branch, the Wall Street Journal reported on Tuesday.
Suspicious activity could be an indication of money laundering, fraud and other financial crimes.
The No. 9 U.S. bank is in discussions with the U.S. Attorney for the Eastern District of New York to pay the penalty, cooperate with prosecutors and agree to independent monitoring of its compliance program, people familiar with the matter told the newspaper.
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 Journal reported that RW Leasing secured large loans, telling its lenders they would be repaid with leasing revenue that went into escrow accounts at the Bank of New York. It also reported that, instead, about $92 million in loan proceeds were deposited into one account at the Bank of New York and at least $28 million was diverted to RW Leasing’s owners.
Because of the large amounts of money involved, prosecutors in the case are saying the bank should have noticed suspicious activity and filed reports with regulators, according to the paper.
The Bank of New York was not immediately available for comment.