The New York Department of Financial Services has taken an increasingly hard line on financial institutions that have violated U.S. sanctions laws through their U.S. dollar clearing operations, imposing steep fines on them.
But the head of that office, Benjamin Lawsky, said in a speech in Washington he could envision moving beyond fines to penalties that could hurt the institutions in more severe ways.
"You could say no dollar clearing for a month or for a year or for six months," Lawsky said, adding that he is still thinking through the potential repercussions of such steps.
Last year Lawsky's office blocked Deloitte LLP's financial advisory unit from working with New York state-regulated banks for a year as part of a settlement related to its review of money laundering controls at Standard Chartered Bank.
"We're considering some new, similar ideas when it comes to our investigations into banks that used their dollar-clearing operations to launder money, but we have not come to any firm conclusions on that issue yet," Lawsky said.
Lawsky, who has worked to establish a reputation as a tough enforcer, did not name firms and told reporters after his speech that his office is still thinking through how they could keep banks out of certain businesses.
U.S. regulators, including Lawsky's office, are looking at whether French banks Credit Agricole and Societe Generale violated anti-money laundering rules and economic embargoes on countries like Iran, Reuters has reported.
Lawsky's office has reached settlements with Bank of Tokyo-Mitsubishi, which is owned by Mitsubishi UFJ Financial Group Inc, and Standard Chartered over similar allegations.
Lawsky said regulators also need to go after more individuals as they figure out new ways to punish financial firms that break the rules.
"Ultimately, when Wall Street executives face real, serious consequences for breaking the rules - it helps deter future misconduct," Lawsky said.
(Reporting by Emily Stephenson; Editing by Leslie Adler)
By Emily Stephenson