Security & Fraud

Capital One Disclosed Inquiry Into Anti-Money Laundering Practices

Capital One Financial last week reiterated in its 10-K filing with the Securities and Exchange Commission (SEC) that it’s being investigated by the New York District Attorney’s Office, the Justice Department and the Financial Crimes Enforcement Network of the Treasury Department for its anti-money laundering (AML) program.

According to the filing and a report in The Wall Street Journal, the government agencies are looking into “certain former check casher clients” that were a part of its commercial banking business, as well as the AML program by the credit card issuer. The latest filing rephrased information by Capital One in earlier SEC filings. A Capital One spokeswoman told the WSJ that it’s the same situation, but different words are being used to describe it.

According to the Wall Street Journal, since July of 2015 Capital One has an open consent order with the Office of the Comptroller of the Currency due to deficiencies from a regulatory perspective in the anti-money laundering program at the company. The action on the part of the Office of the Comptroller of the Currency could hurt Capital One’s acquisition of Cabela’s credit card portfolio, reported the WSJ, noting that another bank could step in and buy the credit card portfolio out from under Capital One.

At a time when regulators are going after money laundering, big banks are hoping to relax some of the oversight in which they are required to take part. According to a Reuters report, the biggest banks in the U.S. will soon be floating a complete overhaul of the rules governing how financial institutions investigate and report potential criminal activity. The banks are arguing that rules imposed in the years after the Sept. 11, 2001, attacks and strengthened during the Obama administration are not merely expensive and onerous — they also have the distinction of being ineffective.


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