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Catch of the Week: Capital One pays $390M to resolve anti-money laundering (AML) violations.

Posted  January 22, 2021

Capital One, one of America’s ten largest banks, has agreed to pay $390 million to resolve allegations that it violated the Bank Secrecy Act and various other laws targeted at preventing money laundering. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) specifically said that Capital One willfully failed to guard against money laundering from 2008 to 2014, including a failure to file thousands of suspicious activities reports and currency transaction reports (required filings when a financial institution has reason to suspect money laundering).

Of the $390 million fine, $100 million is credited against a 2018 settlement in a related investigation conducted by the Office of the Comptroller of Currency, which resolved allegations that Capital One had “systemic deficiencies” in vetting it’s customers for money laundering risks. The company had another settlement regarding AML violations in 2015.

According to FinCEN, Capital One’s conduct (or lack thereof) allowed transactions involving proceeds from “organized crime, tax evasion, fraud, and other financial crimes laundered through the bank into the U.S. financial system” to go unreported.

Many of the violations stemmed from the “check cashing group,” which was established in 2008 at Capital One and several regional banks. The group included up to 150 check cashers in the New York-area.  Capital One provided services to the Check Cashing Group, including armored car shipments and check processing.  While providing these services, Capital One was aware of several compliance and money laundering risks associated with this group, including warnings by regulators and criminal charges against some of the customers. Capital One failed to act despite these warnings, letting the suspicious conduct continue.

The enforcement action comes on the heels of Congress passing major anti-corruption and anti-money laundering legislation. That legislation includes a new whistleblower program, administered by the Department of Treasury, would provide for mandatory awards to whistleblowers who brought forward information about violations of the Bank Secrecy Act (BSA), our primary AML enforcement law. Hopefully, we will see an increased rate of enforcement actions such as this one and less money in the hands of criminals and other nefarious actors.

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Tagged in: Catch of the Week, Financial and Investment Fraud, Financial Institution Fraud, Money Laundering, Tax Fraud,


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