Commentators have widely cited S.A.C. Capital’s $1.8 billion settlement as an example of the recent increase in enforcement actions targeting insider trading. However, it also is part of a less obvious emerging trend: a surge in claims filed under the federal civil money laundering statute. The extent of this escalation is apparent from the fact that over the past three years, the U.S. Attorney’s Office in the Southern District of New York (SDNY USAO) filed more civil money laundering cases seeking penalties in excess of $100 million than all U.S. Attorney’s Offices combined had filed in the preceding 25 years.
This upswing in civil money laundering actions is partially due to an expansion in prosecutors’ focus beyond banks. Banks are the traditional targets of money laundering investigations due to their role in the financial system. In recent civil money laundering cases, however, the government has increasingly used the civil money laundering statute against entities outside the banking industry and even against individuals. Federal prosecutors clearly have recognized the power of the civil money laundering statute as an enforcement tool, and there is good reason to think that their use of this statute will increase in the future.
