Bank Reports Take Down New York Governor

By Ralph C Jensen · March 14, 2008

Oh the tangled webs that some people weave. In this case, former New York Gov. Eliot Spitzer found himself not only tangled in a compromising position, but he was hit with SARs.

In this case, it was the banking industry’s suspicious activity report that led to an investigation, and eventually the resignation. This investigation also concluded an alleged involvement in a high-priced prostitution service, in an affidavit filed by the FBI in New York.

While the headlines scream about the incredibly expensive love tryst, Spitzer’s undoing came when two banks in New York—North Fork Bank and HSBC—filed documents to report suspicious activity reports. The Treasury Department and IRS claim that the governor moved large sums of cash in bank accounts he controlled.

Quick, can you say money laundering, and in the same breathe—jail time.

The reports were filed when the banks said Spitzer’s transactions looked like “structuring” transactions, which is used to hide the source, destination or reason the money is being sent. Investigators now say the governor’s transactions were meant to hide payments to the escort service.

You might remember that Spitzer used to be called the “Sheriff of Wall Street” as he crusaded as the state’s attorney general into securities firms and senior management compensation amounts. Well, the banking security system works. If you ever questioned a financial institutions compliance work to file SARs and currency transaction reports, just know the system works.

Many banks have turned to technology solutions that monitor customer transaction activity. Where parameters are set and when suspicious activity pops up, banks are required to file a SAR.

Some high-profile people seem to get away with … let’s say, murder. I applaud the government for not making a deal with Spitzer and hopefully, the system that works will be rewarded with a little jail time for the former Wall Street sheriff.


About the author

Ralph C Jensen
Ralph C. Jensen is editor-in-chief of Security Products magazine.

You can visit the company Web site at 1105 Media Inc. .


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