U.S Bank has been ordered to pay $613 million for knowingly running an anti-money laundering (AML) system with flaws and for hiding those flaws from federal officials.
In January, U.S Bank customer, Scott Tucker, was sentenced to 16 years in prison for embezzling $4.5 million from borrowers through the use of illegal interest rates and misleading loan terms. Between 2008 and 2012, Tucker’s companies made five million loans that resulted in over $2 billion in proceeds which were then stored and managed in U.S Bank accounts. The Department of Justice (DOJ) stated that “the Bank willfully failed to timely report suspicious banking activities of Scott Tucker…despite being on notice that Tucker had been using the Bank to launder proceeds from an illegal and fraudulent payday lending scheme using a series of sham bank accounts.” In order to hide this from their regulator, the Office of the Comptroller of the Currency (OCC), U.S Bank limited the amount of alerts from the monitoring systems from 2009 to 2014 and were set according to the amount of staff rather than based on the potential risk of the transaction.
U.S Bancorp has agreed to a two year deferred prosecution and has also reached settlements with FinCEN, the OCC and the Federal Reserve. Andy Cecere, President and CEO of U.S Bank has apologized for the Bank’s shortcomings of its AML program and stated that, under a 2015 OCC consent order, the U.S Bank is investing in ways to strengthen their approach to anti-money laundering procedures.
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