NCJ Number
95403
Date Published
1984
Length
201 pages
Annotation
An examination of the scope of criminal misconduct by officers, directors, and insiders in financial institutions as well as the detection and investigation of such abuse by banking agencies and the Department of Justice indicates the need for a special task force, revised policies, and changes in the criminal referral process.
Abstract
Of the 75 commercial bank failures between January 1980 and June 1983, 61 percent involved actual or probable criminal misconduct by officers, directors, or insiders. However, it is difficult to determine the scope of insider abuse in the banking industry, because neither the Federal banking agencies nor the Justice Department routinely compile meaningful statistics on such conduct. In 50 out of 75 recent bank and thrift failures resulting in FBI investigations, the banking agencies either made no criminal referrals or made them only after the institutions had failed. Moreover, the Federal Deposit Insurance Corporation (FDIC) and the Federal Savings and Loan Insurance Corporation (FSLIC) do not conduct full-scale fraud investigations. Their inability to establish an insider abuse strategy may be due to the lack of interagency computerized files, the practice of relying on the institutions themselves to make criminal referrals, and the restrictions of the Right to Financial Privacy Act (RFPA), which prohibits banking agencies from disclosing to law enforcement officials customer bank records without first notifying the involved customers. Banking agencies should establish an interagency computerized information system modeled after the Securities and Exchange Commission's. Agency policies and procedures need to be revised, and the RFPA should be amended to allow transfers of certain insider financial records. Additional recommendations for procedural changes are made. Tabular data are provided.