The Office of the Comptroller of the Currency will soon proceed with formal action against JP Morgan for having weak anti-money laundering systems, Dan Fitzpatrick and Robin Sidel of the Wall Street Journal report.
You may recall that both Standard Chartered and HSCBC (read the thrilling HSBC report here) have been investigated for the same weaknesses. In those cases, weak guards against money laundering resulted in funds allegedly being made available to terrorist groups, Mexican drug cartels and other criminal operations.
The cease-and-desist order from the Office of the Comptroller of the Currency is part of a broader crackdown on the nation’s largest banks, the people said…The OCC’s message was delivered last Thursday and Friday to directors and executives from more than a dozen institutions.
U.S. banks are obligated under the Bank Secrecy Act to report to federal authorities any suspicious activity or cash transactions of more than $10,000. Banks also must have elaborate systems designed to detect criminal activity within their networks. Failure to comply can lead to penalties or prosecution.
The WSJ also reports that JP Morgan has been in talks with regulators the terms of this action for some time.
JP Morgan has been embroiled in a few scandals this year. The $6 billion London Whale trading loss stands out most, but the bank is also being sued for fraud because of mortgage-backed securities sold by Bear Stearns (which was bought by JP Morgan during the financial crisis).
We’ll let you know more when we have it.
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