Enforcement Action

The U.S. Justice Department entered into a deferred prosecution agreement with the Minneapolis, MN-based banking holding company on behalf of its Cincinnati, OH-based subsidiary requiring it to pay a $528 million penalty and continue reform of its BSA and AML compliance.

Pursuant to the deferred prosecution agreement, the Justice Department (DOJ) agreed to defer prosecution of two felony Bank Secrecy Act charges for two years in exchange for the financial institution’s acceptance of responsibility for BSA/anti-money laundering violations. The penalty will be collected through the bank’s forfeiture of $453 million in a related civil forfeiture action and the remainder of $75 million satisfied by the payment of a civil money penalty from the Office of the Comptroller of the Currency.

According to the accepted Statement of Facts, from 2009 and continuing until 2014 U.S. Bancorp (USB) willfully failed to establish and implement an adequate AML program, including the capping of alerts based on available staffing levels instead of using thresholds for suspicious activities based on a transactions level of risk.

The DOJ found that USB was well aware that this practice was improper, with specific examples of AML compliance officers acknowledging the risk of regulatory action for basing suspicious activity reporting on its staffing resources. It also noted that bank officials purposely concealed this practice from the OCC, the bank’s primary regulator.

In addition, the facts state that USB failed to monitor Western Union transactions involving non-customers of the bank that took place at bank branches and did not timely file suspicious activity reports related to longtime customer Scott Tucker, who the bank was aware had been using its services to launder proceeds from an illegal payday lending scheme.