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Challenges in Holding Individuals Accountable in Financial Crimes, Expert Says

Flexi Group

Brandon Garrett, a law professor at Duke University and author of Too Big to Jail: How Prosecutors Compromise with Corporations, has highlighted the difficulties in holding individuals accountable in financial institutions due to the decentralized nature of decision-making. Speaking to American Banker, Garrett explained that the accountability structure in banks and large corporations makes it challenging to identify and prosecute individuals responsible for corporate wrongdoing.


Challenges in Holding Individuals Accountable in Financial Crimes, Expert Says

"Companies can’t go to jail, so their sentences usually involve fines, restitution, compliance reforms, and cooperation with investigations," Garrett stated. "But pinpointing individual responsibility is difficult, even when a company cooperates."


Garrett further elaborated on the complexity within large organizations, where roles are often divided, making it easy for employees to avoid blame. "In large organizations, roles are divided, and it’s easy for people to point fingers," he said, adding that while the U.S. Department of Justice (DOJ) aims to hold individuals accountable for corporate crimes, the complexity of such cases complicates their efforts.


Garrett's comments come in the wake of TD Bank pleading guilty to multiple money laundering charges. The charges stemmed from the U.S. arm of the Canadian firm, where corrupt employees accepted bribes and facilitated the movement of large amounts of illegal funds. Although TD Bank now faces a $3 billion penalty from U.S. regulators and its operations are restricted by an asset cap, no executives have been charged in connection with the scandal.


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According to the DOJ, TD Bank executives had enforced a "flat cost paradigm," a policy that limited the bank’s anti-money laundering (AML) budget, despite the company’s rising profits and increasing risks. Regulators noted that this budget constraint contributed to the firm’s AML failings.


Garrett emphasized that while regulators often aim to target individuals in such cases, the "sheer size and complexity" of these financial organizations frequently hinder those efforts. He rejected the notion that prosecutors might be hesitant to pursue these cases, saying, "There’s no real evidence to support that [prosecutors are sheepish]. Prosecutors find it rewarding to take tough cases to trial; it’s valuable experience, and it’s department policy to hold individuals accountable where possible."


However, Garrett pointed out the inherent difficulties in prosecuting white-collar crimes, particularly in attributing intent and navigating the complex nature of financial transactions. "[But] the complexity of the transactions and attributing intent in these white-collar cases pose significant challenges," he explained.

By fLEXI tEAM


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