US Bank Fined $613M For AML Violations

According to a press release, FinCEN said the obligation will be satisfied by a $70 million payment from U.S. Bank to the U.S. Department of the Treasury, with the remaining amount satisfied by payments from the DOJ’s actions. Since 2011, FinCEN claimed U.S. Bank knowingly breached the Bank Secrecy Act’s reporting requirements by not creating and implementing a good enough anti-money laundering (AML) program. The bank was charged with failing to flag suspicious activity and inadequately reporting currency transactions.

“U.S. Bank is being penalized for willfully violating the Bank Secrecy Act and failing to address and report suspicious activity. U.S. Bank chose to manipulate their software to cap the number of suspicious activity alerts rather than to increase capacity to comply with anti-money laundering laws,” said FinCEN Director Kenneth A. Blanco in the press release. “U.S. Bank’s own anti-money laundering staff warned against the risk of this alerts-capping strategy, but these warnings were ignored by management. U.S. Bank failed in its duty to protect our financial system against money laundering and [to] provide law enforcement with valuable information.”

According to the New York Times, the bank agreed to settle with the Justice Department charges and pay a total of $613M for the various fine and penalties.

Banks in the U.S. are required to engage in risk-based monitoring of payment transactions and to alert the appropriate staff if they notice suspicious activity. FinCEN, the OCC and the DOJ contend that U.S.  Bank opted to cap the number of alerts its automated transaction monitoring system would generate so the bank would find only a predetermined number of transactions to investigate, without taking into account legitimate alerts that would be lost because of the cap.