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Bank of America (BAC-1.03%) agreed to a consent order with the Officer of the Comptroller of the Currency Monday to correct deficiencies within its anti-money laundering practices.
The second-largest U.S. bank by assets agreed to remedy failures related to the timely filing of suspicious activity reports and correcting a previously identified deficiency related to its Customer Due Diligence processes, the OCC said in a release.
Bank of America didn’t admit or deny the charges, and it did not receive a monetary penalty. Instead, the Charlotte, North Carolina-based firm will have to take a number of steps to bolster its compliance with the regulations. These include outlining plans for vetting new customers and carrying out risk assessments, as well as hiring an independent consultant to ensure that suspicious activity is accurately reported.
“We have been working closely with the Office of the Comptroller of the Currency over the past year to make improvements to our anti-money laundering and sanctions programs,” Bank of America said in a statement. “The work we’ve done so far positions us well to implement the requirements of the consent order.”
These activities fall under Bank Secrecy Act requirements, which were first created in 1970 to guide financial institutions on the detection and prevention of money laundering through their systems, also known as Anti-Money Laundering laws, or AML. Under the act, all financial institutions follow a set of guidelines known as KYC (Know Your Customer/Client) — a process that these firms use to verify the identity of, and risks from, potential clients.
The OCC also said it found deficiencies within Bank of America’s internal controls, governance, independent testing, and training components its BSA compliance program.
In an October quarterly regulatory filing, the bank said it had been — and plans to continue — implementing enhancements to Bank Secrecy Act programs. Based on discussions with regulators, the bank said it doesn’t expect the issues related to this programs to have a material adverse financial impact.
This comes a little over two months after TD Bank (TD+0.44%) was hit with a landmark penalty over its failure to curb financial crimes in its systems. In October, Canada’s second-largest bank became the largest one in U.S. history to plead guilty to Bank Secrecy Act program failures and the first to plead guilty to conspiracy to commit money laundering.
Over the course of six years, TD Bank failed to monitor $18.3 trillion in customer activity in the United States. In its plea agreement, TD Bank admitted that this allowed three money laundering networks to transfer over $670 million through the bank’s accounts.
The bank agreed to pay a record $1.3 billion to the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN. The Office of the Comptroller of the Currency slapped a cease and desist order and a $450 million civil penalty on TD Bank Thursday over its inadequate Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance program. And the Federal Reserve Board imposed a $123.5 million penalty.
