Business Notes Banking

James V. McDonough was far more congenial than the average depositor at Boston's Bank of New England. Authorities say he tipped a head teller on four occasions with envelopes containing $100 each and brought so many bottles of wine to the bank at Christmastime that employees distributed the gifts on a cart. Last week the reason for his generosity became clear. A federal grand jury indicted the bank (assets: $4.9 billion) and two of its employees on charges of allowing McDonough, a convicted loan shark and bookie, to make withdrawals totaling $817,200 from his account without notifying the Internal Revenue Service. Financial institutions are required by federal law to report all cash transactions of more than $10,000.

The Bank of New England is the latest institution to be caught in a federal crackdown on money laundering, a booming business in which banks, either wittingly or not, help criminals hide their loot from authorities. The dragnet began making headlines in February, when the Bank of Boston paid a $500,000 fine for failing to report large transactions. The Bank of New England, which faces penalties of up to $18 million, said last week it would fight the charges.