U.S. Bancorp fined for BSA, AML and risk management lapses

The Federal Reserve Board on Feb. 15 ordered Minneapolis-based U.S. Bancorp to improve risk management and oversight of its banking subsidiaries’ compliance with U.S. economic sanctions, and Bank Secrecy Act and anti-money-laundering requirements. The Fed also required US Bancorp to ensure its personnel make timely and complete disclosures to regulatory authorities. The Fed imposed a $15 million penalty.

Under the terms of the Board’s consent cease and desist order, U.S. Bancorp must strengthen oversight of firmwide risk-management and compliance programs for preventing violations of anti-money-laundering and U.S. sanctions laws and put in place procedures to ensure it provides adequate and complete responses to examiner inquiries.

In a separate action, the U.S. Department of Justice announced the execution of a deferred prosecution agreement with U.S. Bancorp for violations of the Bank Secrecy Act that occurred at its national bank subsidiary. The deferred prosecution agreement provides for a $528 million forfeiture by U.S. Bancorp. In addition, the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network announced penalties of $75 million and $185 million respectively against U.S. Bancorp’s national bank subsidiary for violations of the Bank Secrecy Act.

In a release issued the same day, U.S. Bank said it has resolved matters related to its BSA and AML compliance programs with the U.S. Attorney’s Office for the Southern District of New York, the Office of the OCC, the Fed and FinCEN.

“We regret and have accepted responsibility for the past deficiencies in our AML program. Our culture of ethics and integrity demands that we do better. One of U.S. Bank’s key priorities is to maintain an exceptional AML program and we are confident in the strength of the program we have in place today,” said Andy Cecere, President and CEO, U.S. Bank. “We have worked diligently over the past several years to make significant investments to improve and strengthen our AML controls, processes and staff, which includes our efforts under a 2015 OCC consent order.

According to the bank, its improved AML program includes:

  • New leadership team running the Bank’s AML program since 2014 – many recognized as leaders in the industry and come from law enforcement backgrounds;
  • A more transparent and frequent AML reporting and escalation process to the Board and executive management;
  • A centralized, independent, enterprise-wide financial crimes compliance function;
  • Improved AML controls and training for all customer-facing employees;
  • Expanded transaction monitoring to identify potentially suspicious activity;
  • AML compliance staff that has increased significantly; and
  • Improved risk identification, oversight, and reporting functions.

The company will pay a total of $613 million, reflecting the penalties assessed by each agency.