Bank integrity

AT its best, the American banking community has sought to ensure the highest possible standards of professionalism and probity. Banks exercise a public trust. They hold customer deposits. And they lend out their funds for worthy purposes -- such as business loans, personal loans, home mortgages, college funds. It is in this regard that one can only regret the controversy now involving the long-respected First National Bank of Boston, the largest bank in New England, which has been fined $500,000 for failing to report $1.22 billion in cash transactions with nine foreign banks as required by a currency requirement put into place in 1980. The law has become the linchpin of the Reagan administration's effort to investigate and prevent the ``laundering'' of money by organized crime.

Officials of the Bank of Boston, parent company of the First National Bank of Boston, deny any link between the violation of the currency law and organized crime. Indeed, the bank argues that it failed to register the particular currency transactions because of a ``systems failure.'' Although, bank officials say, some 10 to 12 bank departments dealt with the overseas transactions, officials along the way had missed the regulation, or not understood it correctly. That is extraordinary.

Whether or not this is the end of the matter is still unclear. There are press reports that the Justice Department is widening its inquiry into banking transactions involving other New England financial institutions. Still, the incident underscores the need for careful attention to the regulatory process on the part of the banking community.

That is particularly the case now that there is so much demand for dollars in international currency transactions. It is no exaggeration to say that traders and bankers everywhere want dollars these days -- an explanation that more than any technical factor seems to explain the continued surge of the dollar on world currency markets. In other words, given the demand for dollars, more and more of them will be flowing back and forth across the Atlantic.

At the same time, the federal government should continue its investigation into international currency transactions, where the laundering of money is involved. Washington has been looking at a number of Florida banks in particular. As pointed out by Bank of Boston officials this week, not all failures to report such currency transactions abroad are necessarily linked to criminal activities. But the public has the right to expect that the letter of the law is being scrupulously observed -- especially on the part of financial institutions entrusted with the public's deposits. ------30{et