New York - Regulators are investigating whether several major
US banks failed to monitor transactions properly, allowing criminals
to launder money, according to a New York Times story. The newspaper
cited officials who it said spoke on the condition of anonymity.
The Office of the Comptroller of the Currency, the
federal agency that oversees the biggest banks, is leading the
money-laundering investigation, according to the Times. The report said
the OCC could soon take action against JPMorgan Chase & Co., and
that it is also investigating Bank of America Corp. Money laundering
allows people to make money - often obtained illegally - appear like it
came from another source.
The OCC didn't immediately comment. JPMorgan and Bank of America declined to comment.
The financial industry is struggling to mend its public
image. Four years after the financial crisis, banks are getting closer
scrutiny. And regulators are under pressure to show that they're not
missing any questionable activity.
This summer, British bank Barclays PLC settled charges
that it had manipulated a key global interest rate. Standard Chartered
PLC, also based in the UK, agreed to settle charges that it had
improperly processed money for Iran, brought by the New York Department
of Financial Services after the bank voluntarily informed regulators
that it was reviewing relevant practices. In the spring, JPMorgan
surprised shareholders with an unexpected trading loss.
If the OCC takes action, it could be similar to a
cease-and-desist order that it filed against Citigroup in April. At the
time, the OCC said that Citi had deficient internal controls and
anti-money laundering procedures. In bank regulation, a cease-and-desist
order doesn't mean that a bank has to shut down, but it is a serious
sanction that requires a bank to change its practices. Citi had already
told the regulator that from 2006 to 2010, it had "failed to adequately
monitor" some of its transactions connected to "foreign correspondent
banking."
The order in April didn't make any new, specific
accusations. But it did instruct Citigroup to tighten its rules so it
could improve compliance with the Bank Secrecy Act and related
regulations. The act requires financial institutions to report
suspicious activity and to put rules in place to try to make money
laundering impossible for customers.
Last year, JPMorgan paid $88 million to settle charges
from the Treasury that it had unlawfully processed money for Cuba, Iran,
Sudan and Liberia.
At the time, JPMorgan said it had had no intent to
violate regulations. It pointed out that it oversaw "hundreds of
millions of transactions and customer records per day, and annual error
rates are a tiny fraction of a percent."
It's not expected that banks would be accused of trying
to show support for countries like Cuba and Iran. It's more likely that
they would be accused of faulty oversight that made any unlawful
transactions possible. The industry has maintained that such violations
are almost always unintentional.
According to the Times, the Justice Department and the
Manhattan district attorney's office are also involved. The Manhattan
US attorney's office and the Manhattan district attorney's office
declined to comment.
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