FINANCIAL INSTITUTIONS FRAUD
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 662
II. BANK FRAUD STATUTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 662
A. Purpose and Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663
B. Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 664
1. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 664
2. Executed or Attempted to Execute . . . . . . . . . . . . . . . . . 666
3. Scheme or Artifice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666
4. To Defraud or Obtain Monies by False or Fraudulent
Pretenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 667
a. Defrauding a Financial Institution . . . . . . . . . . . . . . 667
b. Employing False or Fraudulent Pretenses . . . . . . . . . 668
5. Financial Institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 668
C. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 669
1. Custody or Control .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 669
2. Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 670
3. Multiplicity or Duplicity of the Indictment . . . . . . . . . . . 671
D. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672
III. THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND
ENFORCEMENT ACT . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674
A. Purpose and Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674
B. Civil Sanctions for Insider Fraud . .. . . . . . . . . . . . . . . . . . . . 675
1. Applicable Law in Civil Cases under FIRREA: Atherton v.
FDIC .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 676
2. Federal Common Law Post-Atherton: Circuit Split on the
D’Oench Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 677
C. Criminal Penalties Under 12 U.S.C. § 1818(j) . . . . . . . . . . . . 679
1. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680
2. Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680
3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680
4. The Dual Functions of the FDIC . . . . . . . . . . . . . . . . . . . 681
D. Recent Prosecutions and Settlements . . . . . . . . . . . . . . . . . . . 681
IV. THE BANK SECRECY ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685
A. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685
B. Title I: Record-Keeping Requirements . . . . . . . . . . . . . . . . . . 686
1. Additional Records to Be Retained by Banks . .. . . . . . . . 687
2. Additional Records to Be Retained by Brokers and Dealers
in Securities .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688
3. Additional Records to be Retained by Casinos . . . . . . . . . 689
661
4. Additional Records to be Retained by Currency Dealers and
Exchangers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 689
5. Enforcement and Penalties . . . . . . . . . . . . . . . . . . . . . . . 690
C. Title II: Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . 691
1. Money Services Businesses . . . . . . . . . . . . . . . . . . . . . . 691
2. Currency Transaction Reports .. . . . . . . . . . . . . . . . . . . . 692
a. Domestic Currency Transactions . . . . . . . . . . . . . . . 693
b. Foreign Currency Transactions . . . . . . . . . . . . . . . . 694
c. Transactions with Foreign Financial Agencies . . . . . 695
3. International Transportation of Currency and Monetary
Instruments Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695
a. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . 695
i. Legal Duty to File . . . . . . . . . . . . . . . . . . . . . . 696
ii. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . 697
iii. Willful Violation of the Reporting Requirement 697
b. Enforcement and Penalties . .. . . . . . . . . . . . . . . . . . 698
c. Defenses . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 698
4. Structuring Transactions to Avoid Reporting Requirements 700
a. Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700
b. Enforcement and Penalties . .. . . . . . . . . . . . . . . . . . 701
c. Defenses . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
d. Recent Prosecutions and Settlements . . . . . . . . . . . . 702
I. INTRODUCTION
This Article reviews the development and application of three federal criminal
statutes that govern offenses by or against financial institutions. Section II analyzes
the Bank Fraud Statute (“BFS”),
1
which concerns fraud against financial institu-
tions. Section III reviews the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (“FIRREA”),
2
which regulates the conduct of officers,
directors, and third-party fiduciaries who fraudulently manage financial institu-
tions. Finally, Section IV examines the Bank Secrecy Act (“BSA”),
3
which
imposes recordkeeping requirements on financial institutions to deter and identify
money laundering, terrorist financing, and other deceptive financial transactions.
II. BANK FRAUD STATUTE
This Section examines the Bank Fraud Statute (“BFS”), 18 U.S.C. § 1344.
Specifically, this Section addresses the purpose and scope of § 1344, delineates its
1. Bank Fraud Statute, 18 U.S.C. § 1344 [hereinafter BFS].
2. Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183
(1989) [hereinafter FIRREA] (codified in scattered sections of 12 U.S.C., 18 U.S.C., and 31 U.S.C.).
3. Bank Secrecy Act, 12 U.S.C. §§ 1829b, 1951–1960; 31 U.S.C. §§ 321, 5311–5314, 5316–5336.
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statutory elements, discusses several defenses to a charge of bank fraud, and
presents the sanctions for violations.
A. Purpose and Scope
The purpose of the BFS is to protect the financial integrity of financial institu-
tions,
4
thereby protecting the interests of the federal government as an insurer.
5
The BFS was enacted following the Supreme Court’s decision in Williams v.
United States,
6
which held that the crime of making false statements to financial
institutions under 18 U.S.C. § 1014 did not encompass a check-fraud scheme, often
referred to as check kiting.
7
In response to Williams, Congress passed § 1344 with
the primary purpose of giving the government the ability to prosecute check kiting
and other sophisticated frauds targeting financial institutions.
8
The BFS, as enhanced by the FIRREA and the Crime Control Act of 1990,
9
has
since become the basic provision for prosecuting bank fraud.
10
Section 1344 is
broadly written and criminalizes a variety of offenses against financial institu-
tions, including check kiting,
11
check forging,
12
false statements and nondisclo-
sures on loan applications,
13
stolen checks,
14
the unauthorized use of automated
teller machines (“ATMs”),
15
credit-card fraud,
16
student-loan fraud,
17
sham
transactions between offshore “shell” banks and domestic banks,
18
automobile-
4. See United States v. Jimenez, 513 F.3d 62, 72–73 (3d Cir. 2008); United States v. Leahy, 445 F.3d 634, 646
(3d Cir. 2006), abrogated on other grounds by Loughrin v. United States, 573 U.S. 351 (2014).
5. See United States v. Davis, 989 F.2d 244, 247 (7th Cir. 1993); United States v. Laljie, 184 F.3d 180, 189
(2d Cir. 1999). But see United States v. McNeil, 320 F.3d 1034, 1037–38 (9th Cir. 2003) (distinguishing from
Davis and adopting a broader view of the BFS’s purposes).
6. Williams v. United States, 458 U.S. 279 (1982).
7. Id. at 283, 290.
8. Steven M. Biskupic, Fine Tuning the Bank Fraud Statute: A Prosecutor’s Perspective, 82 MARQ. L. REV.
381, 382–92 (1999).
9. Crime Control Act of 1990, Pub. L. No. 101-647, 104 Stat. 4789 (1990) (codified as amended in scattered
sections of 18 U.S.C.).
10. John F. Wagner, Jr., Annotation, What Constitutes Violation of Federal Bank Fraud Statute (18 U.S.C.A §
1344), 99 A.L.R. Fed. 888, § 2[a] (1990).
11. See, e.g., United States v. Watson, 756 F. App’x 662, 665 (8th Cir. 2019); Liberty Bell Bank v. Rogers,
726 F. App’x 147, 152 (3d Cir. 2018).
12. See, e.g., Loughrin v. United States, 573 U.S. 351,363–64 (2014).
13. See, e.g., United States v. Moratalla, 82 M.J. 1, 3 (C.A.A.F. 2021); United States v. Fattah, 858 F.3d 801,
815 (3d Cir. 2017); United States v. Peterson, 823 F.3d 1113, 1120–21 (7th Cir. 2016).
14. See, e.g., United States v. Maxwell, 778 F.3d 719, 726–27 (8th Cir. 2015).
15. See, e.g., United States v. Thi, 692 F.3d 571, 572 (7th Cir. 2012); United States v. Miller, 70 F.3d 1353,
1355–56 (D.C. Cir. 1995).
16. See, e.g., United States v. Banks-Davis, 552 F. App’x 215, 216 (4th Cir. 2014); United States v. Warshak,
631 F.3d 266, 312–13 (6th Cir. 2010); United States v. Harris, 597 F.3d 242, 247–49 (5th Cir. 2010).
17. See, e.g., United States v. Moore, 703 F.3d 562, 565–66 (D.C. Cir. 2012); United States v. Sanders, 59
F. App’x 765, 766–67 (6th Cir. 2003); United States v. Guyon, 27 F.3d 723, 724–25 (1st Cir. 1994).
18. See, e.g., United States v. Weigand, 482 F. Supp. 3d 224, 237 (S.D.N.Y. 2020); see also S. REP. NO. 98-
225, at 379 (1983), as reprinted in 1984 U.S.C.C.A.N. 3182, 3519 (noting “use of bogus or ‘shell’ offshore banks
has increasingly become a means of perpetrating major frauds on domestic banks” and asserting congressional
intent that the statute have extraterritorial reach).
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