Recent enforcement actions and guidance suggest that U.S. banking examiners are ratcheting up their scrutiny of how banks monitor payment processors for anti-money laundering risks. In April, the U.S. Office of the Comptroller of the Currency ordered Charlotte, N.C.-based Wachovia Corp. to pay a $10 million penalty and compensate victims of a fraud involving a payment processor as much as $125 million. The case involved telemarketers pressuring elderly citizens for account information from their paper checks. They were then using that information to generate a "remotely created check" transaction, where the paper check is turned into an electronic transaction. Regulators...
Financial institutions may need to update anti-money laundering controls, due diligence and screening associated with their third-party payment processor customers, particularly those based internationally, according to U.S. Treasury guidance issued Monday.
Faced with raised compliance expectations, many large financial institutions are expanding the types of corporate clients they ask to implement anti-money laundering controls to include import-export businesses, payroll companies and payday lending firms.
Finding themselves locked out of some large U.S. banks because of compliance concerns, third-party payment processors are increasingly turning to small- and mid-sized institutions for financial services, say consultants.
Wachovia Bank will pay up to $125 million to compensate victims of a telemarketing fraud conducted through accounts at the bank and a $10 million civil penalty under agreements reached with the Office of the Comptroller of the Currency.