Four US watchdogs have fined the group a total of $613 million, leaving a dent in its balance sheet.

US authorities have fined US Bancorp more than $600 million and charged it with two criminal violations of the Bank Secrecy Act over lapses in its anti-money laundering (AML) regime.

The US’ fifth-largest bank by assets ran its AML program “on the cheap” by capping staff numbers and placing hard caps on the number of alerts generated by its transaction monitors, the US Department of Justice (DoJ) said.

The bank was aware that these practices were improper, and led to it missing “substantial numbers” of suspicious transaction reports from 2009 to 2014, the DoJ said. 

US Bancorp has entered into a two-year deferred prosecution agreement with the US Attorney’s Office in New York, which fined it $453 million. The Office of the Comptroller of the Currency (OCC) issued a $75 million penalty, Financial Crimes Enforcement Network (FinCEN) billed Bancorp $70 million, and the Federal Reserve $15 million, totalling $613 million.

Shares in US Bancorp, which has a prominent wealth management unit, were down 0.38 per cent, trading at $55.10 at the time of writing (10:57am GMT, 2/16/18). 


Source: Google

The DoJ cited a memo from an AML officer to the bank’s head of compliance which said AML staff were “stretched dangerously thin”, warning that “a regulator could very easily argue” the bank should have tested more suspicious transactions to see if reports to FinCEN were necessary. 

Staff tried to hide short-cuts from examiners at the OCC, the bank’s primary regulator, according to the DoJ. The AML officer described the bank’s AML program to another senior manager as an effort to use “smoke and mirrors” to “pull the wool over the eyes” of the OCC.

“We regret and have accepted responsibility for the past deficiencies in our AML programme,” Andy Cecere, US Bancorp’s chief executive, said. “Our culture of ethics and integrity demands that we do better.” 

US Bancorp noted that it had appointed new leaders at its AML division since 2014 and had instituted “a more transparent and frequent” reporting and escalation process to the board and executive management.