Capital One Bank Pays $100M OCC Penalty For AML Deficiencies

by Ike Obudulu Posted on October 23rd, 2018

Washington D.C., USA : The Office of the Comptroller of the Currency (OCC) has assessed a $100 million civil money penalty against Capital One, N.A., and Capital One Bank (USA), N.A. for deficiencies in the bank’s Bank Secrecy Act/Anti-Money Laundering program.

The deficiencies, cited in the OCC’s 2015 order against the bank, included weaknesses in its compliance program and related controls; deficiencies in its risk assessment, remote deposit capture and correspondent banking processes; and failing to file suspicious activity reports. In assessing this civil money penalty, the agency found that the bank failed to achieve timely compliance with the OCC’s 2015 order, as required.

The bank paid the assessed penalty to the U.S. Treasury.

A spokesperson for the bank said the fine related to past activity.

“[This penalty] emanates primarily from prior banking relationships with certain check cashing service providers — a business we made the decision to exit in 2014,” a spokesperson for Capital One said.

Since that time, we have worked diligently with our bank regulators to strengthen our processes and internal controls to ensure we address any concerns regarding our BSA/AML compliance processes.”

Capital One said in 2014 that it would stop doing business with payday lenders and check cashers, saying that those businesses no longer fit into the bank’s strategic priorities.

In 2015, Capital One also received requests for information from the Justice and Treasury departments about its AML program and check casher clients.

 Comptroller’s Findings

The Comptroller finds, and the Bank neither admits nor denies, the following:

(1) The OCC’s examination findings establish that the Bank has deficiencies in its  BSA/AML compliance program. These deficiencies have resulted in a BSA/AML compliance  program violation under 12 U.S.C. § 1818(s) and its implementing regulations 12 C.F.R. § 21.21  (BSA Compliance Program). In addition, the Bank has violated 12 C.F.R. § 21.11 (Suspicious  Activity Report Filings).

(2) The Bank has failed to adopt and implement a compliance program that  adequately covers the required BSA/AML program elements due to an inadequate system of  internal controls and ineffective independent testing, and the Bank failed to file all necessary  Suspicious Activity Reports (“SARs”) related to suspicious customer activity.

(3) Some of the critical deficiencies in the elements of the Bank’s BSA/AML compliance program, resulting in a violation of 12 US.C. § 1818(s)(3)(A) and 12 C.F.R. § 21.21, include the following:

(a) The Bank lacks an enterprise-wide BSA/AML risk assessment.
(b) The Bank has systemic deficiencies in its transaction monitoring systems, risk management, and quality assurance programs for its remote deposit capture services.
(c) The Bank has systemic deficiencies in its customer due diligence processes and failed to have customer due diligence and enhanced due diligence policies and processes specific to Correspondent Banking.
(d) The Bank lacks a process by which BSA/AML control decisions are escalated to Risk Management.

(4) The Bank failed to identify significant volumes of suspicious activity and file the
required SARs concerning suspicious customer activities, in violation of 12 C.F.R. § 21.11.

The OCC charters, regulates, and supervises all national banks and federal savings associations as well as federal branches and agencies of foreign banks. The OCC is an independent bureau of the U.S. Department of the Treasury.

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