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The Bank That Received US$2.5 Billion In Penalties

Case study money laundring

A multinational bank was subject to an investigation in both the USA and the UK over allegations that some of its employees had manipulated an interbank lending rate.  

Upon finding evidence of criminal activity within some departments, thanks to the intervention of a whistleblower, authorities on both sides of the Atlantic concluded that a number of parties within the bank had benefited from the misconduct. The financial penalties levied against the organisation totalled US$2.5 billion (€2.3 billion).   

Background

Regulators acted on allegations that some employees of the bank had manipulated a benchmark interest rate which was used to set short-term loans for global banks. Because it was based on oral submissions and related to completed transactions, traders and other bank employees could shift the lending rate. 

As more than US$4 billion of financial contracts were affected by the interest rate, incremental changes could lead to major profits for banks.  

An agency was already investigating the bank when the reporting person, one of its former executives, approached a separate body to blow the whistle. His evidence was then used to inform the ongoing inquiry, with his lawyer claiming his evidence was crucial to providing proof of misconduct occurring. The investigation found that there had been manipulation of the interest rate. It also criticised the bank for taking too long to provide requested documents. 

What happened next?

As a result of the evidence uncovered, which included emails, phone calls and electronic messages, the investigators found the bank to be in breach of the legislation in effect in 2015. It was fined US$2.5 billion and ordered to dismiss seven employees.  

In 2022, the whistleblower was awarded US$200 million in the US for providing the information that led to the ruling.  

What can we learn from the case?

The bank did not spot and deal with the misconduct in the operations of some of its departments. This meant it could not counter the actions that led to regulatory sanctions.  

The investigation began before the whistleblower spoke out. Had they seen a route to broach the subject internally before external forces became involved, the bank could have contained the problem and dealt with it accordingly. This could have led to a more lenient ruling from the regulators. It could even have contained the misconduct. 

Promoting a speak-up culture and implementing a whistleblowing system to enable easy reporting are ways to prevent these kinds of situations from developing.bank-that-received-billions-in-penalties-2

How IntegrityLog helps

IntegrityLog is an online whistleblowing channel that allows for confidential reporting. It holds data in a GDPR-compliant and secure manner and helps investigation teams stick to the deadlines set out in the EU Whistleblowing Directive. Request a demo today or request a 14-day free trial to find out how it can help you develop a compliance culture at work.  

References and further reading

 

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