It seems the Federal Government has finally woken up and is making a show of being serious about one type of bank misbehavior, that of money laundering. The striking element about the agreement with various Federal agencies and the Department of Justice is that nearly $1.3 billion of the $1.9 billion fine comes in the form of a deferred prosecution agreement. This is the criminal analogy to injunctive relief, in which a miscreant is granted amnesty in return for committing to change its behavior in specific ways. The charges are then dismissed if the subject follows through. On paper, this is a much tougher regime than the frequently violated injunctive relief, since the charges remain over the head of the miscreant until they are dismissed. The open question in these cases is whether the monitoring of compliance is serious or pro-forma, and that’s impossible to know from the outside.
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