The comments in an exit interview with James Cole, the department's No. 2 official, come as some of the world's largest banks gear up to pay billions in fines over the manipulation of foreign exchange rates, just months after some of the same banks paid out billions in penalties for other wrongdoing.

"What I saw frequently is, companies don’t have the robust compliance programs," Cole said. "They fix the one that they got in trouble on" rather than embarking on more comprehensive efforts that would prevent other kinds of misconduct.

In the past five years, global banks have paid out more than $60 billion in fines and penalties to the Justice Department and regulators over misleading investors on mortgage securities, allowing sanctioned entities to access the U.S. financial system, manipulating interest rates, and other problems.

U.S. regulators and lawmakers have questioned whether such fines are enough to deter misconduct. In one effort to get tougher on repeat offenders, some U.S. Securities and Exchange Commission officials are giving greater scrutiny to waivers from certain penalties that were once routinely granted.

"What it does, by necessity, as we see this repeated across business lines, is it ups the ante each time," Cole said, adding that the recurring nature of banks' offences could result in monitors appointed by prosecutors with broad mandates to look across an institution.

In November, regulators fined six global banks $4.3 billion for failing to stop traders from trying to manipulate the foreign exchange market. The U.S. Justice Department is still interviewing traders and has ordered banks to finish turning over related information to criminal authorities this month.

"We really need more of a soup-to-nuts kind of solution," Cole said, referring to the idea of broader monitors.

Banks have acknowledged mistakes, but have generally blamed problems on lower-level employees not acting on the orders of senior management. With hundreds and thousands of employees, some will inevitably engage in wrongdoing, bank representatives have said.

Industry groups were not readily available for comment on Cole's assertions.

RECORD-BREAKING PENALTIES

Over the past two years, the U.S. Justice Department has imposed record-breaking penalties on at least nine firms, including in six cases this year alone.

"Really all you can do with a corporation is fine it and change its behaviour," Cole said. "You can't throw a corporation into prison, so the whole idea here is to have some sort of punishment that matters."

Earlier this year, U.S. prosecutors also secured guilty pleas from two foreign banks, attributing the harsher punishment to a lack of cooperation in the investigations.

On the regulatory side, SEC commissioners Kara Stein and Luis Aguilar, both Democrats, have been cracking down on the once routine waiver practice for big banks who were fined for misconduct.

Last month, the SEC granted a temporary, conditional waiver to Bank of America Corp, which agreed in August to pay $16.6 billion over allegations it misled investors about toxic mortgage securities. The waiver would allow the bank to raise capital from private deals, but only if certain conditions are met.

"If we are going to grant waivers, we should use them as another accountability tool," Stein said in an interview.

Democratic Senator Elizabeth Warren, a vocal critic of Wall Street, has argued that banks won't change until individuals are held accountable. Prosecutors have argued that the diffuse nature of responsibility and the lack of day-to-day involvement by senior executives in conduct found to be unlawful has limited their ability to go after them.

(Reporting by Aruna Viswanatha, with additional reporting by Sarah N. Lynch; Editing by Christian Plumb)

By Aruna Viswanatha