Big sanctions for American Express Bank International underscore the dangers of dirty money and the high cost to the South Florida international banking sector.

South Florida banks are on alert after American Express Bank International was hit with $65 million in sanctions over dirty money.

For years, Miami bankers have insisted that the billions of dollars in their bank vaults were clean.

But the record $65 million in sanctions federal regulators assessed against Miami-based American Express Bank International this week underscores that the era of dirty dollars flowing through local financial networks remains a problem.

American Express Bank International, a unit of the global credit card giant American Express Co., became the 19th financial institution in South Florida to face sanctions since 2004.

''On a proportional basis, [given] the number of institutions that Miami has, South Florida leads the country in Bank Secrecy Act and anti-money laundering violations,'' says Charles Intriago, publisher of the Miami-based Money Laundering Alert.

Experts say South Florida institutions are at higher risk for money-laundering sanctions because of the number of international banks located here and the high volume of Latin American money held in deposits.

''We have so much international business here in Florida from Latin America,'' says Grace V. McGuire, senior partner at McGuire & McGuire Banking Consultants. ``Cities such as ours are going to be more vulnerable to these type of issues.''

GLOBAL CLIENTELE

Some 40 foreign bank agencies and other institutions that handle accounts exclusively for international clients call South Florida home. Local and national banks in both Miami-Dade and Broward counties also handle numerous private banking accounts for international customers.

In addition to stringent safeguards mandated by the Bank Secrecy Act, such as special systems to detect suspicious deposits, extensive training and outside verification of compliance with anti-money laundering procedures, financial institutions are required to pay special attention to the accounts of senior foreign political leaders or their close associates.

MONITORING EFFORTS

And banks have been spending millions of dollars to beef up their monitoring systems.

The documents filed in the American Express Bank International case in federal court in Miami offer tantalizing details about a breakdown in anti-money laundering procedures at the bank from 2002 to 2004, which then allowed drug money to flow directly into targeted accounts -- some that were controlled by offshore corporations.

In one incident, an American Express Bank International officer reviewing an account ``failed to note that during the month there were several unexplained incoming wire transfers, one of which, unbeknownst to the reviewer, came from a DEA [Drug Enforcement Administration] undercover account and was drug money.''

''When you work with the Tony Montanas of the world -- whether it is a sting or not -- that takes it to a different level,'' says Ken Thomas, a Miami bank analyst and lecturer at the Wharton School of Business of the University of Pennsylvania.

''This is a worldwide bank. This is significant,'' says Thomas. ``It tarnishes the American Express name. More important than the [amount of the fine] is the reputational risk.''

The Justice Department agreed to defer prosecution after American Express Bank International took responsibility for the lapses and promised to strengthen its safeguards.

The agreement to defer prosecution was signed by American Express Bank International Chief Executive Simon E. Amich, who was the past president of the Florida International Bankers Association.

A LOSING BATTLE

Despite the number of institutions caught up in federal enforcement actions, members of the local banking community say South Florida bankers are trying hard to comply with anti-money-laundering regulations.

''It's impossible to say there is no dirty money in the banking system,'' says Miami banking lawyer Al Avila. ``Overall the banks have done a good job.''

The banking attorney pointed to tougher enforcement by regulators as the reason for the high number of sanctions.

''In the past they probably would have been somewhat more lenient and flexible,'' he says.