AML regs inadvertently ensnare politician


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Federal AML laws to stem the use of the banking system by money launderers and other criminals tend to be designed to catch the big fish, financially. But former U.S. congressman Dennis Hastert got caught up in the net for allegedly paying hush money to an acquaintance for past improprieties—but his trouble stems not from the payments but rather the manner in which he accessed his assets in his personal bank accounts.

Hastert has been criminally charged with lying to the FBI about his personal financial transactions related to the alleged extortion. Hastert appeared to be structuring withdrawals from his personal bank accounts in order to escape scrutiny about the purpose of his withdrawals.

Hastert has pled not guilty to the charges that he tried to hide $1.7 million in cash withdrawals and that he lied to federal authorities when questioned about the withdrawals, which qualified as suspicious activity relative to federal banking regulations related to AML.

Bank officials had questioned Hastert about multiple withdrawals of $50,000, and that questioning allegedly motivated Hastert to structure his withdrawals in smaller amounts to avoid further scrutiny. This type of “structuring” is a common behavior in money laundering, and so drew further scrutiny from the FBI and IRS. Hastert explained his actions by saying that he did not trust banks and wanted to hold these assets in cash at home. The federal indictment, however, alleges that Hastert had agreed to pay an acquaintance $3.5 million in hush money and so wanted to conceal the true purpose of his withdrawals.

Hastert has not been charged with a crime related to the alleged improprieties, but rather he has been charged regarding his behaviors related to accessing his personal bank accounts in a manner disallowed by banking regulations and hiding those behaviors.