American Express Hit With $350 Million Fine For Anti-Money Laundering Lapses

Authored by Bill Pan via The Epoch Times,

American Express has been ordered to pay a $350 million penalty over what federal regulators described as “critical deficiencies” in its anti-money laundering controls.

The regulators said it missed about $13 billion in suspected activity over more than a decade.

The Office of the Comptroller of the Currency announced the civil penalty and a cease-and-desist order on Thursday against American Express National Bank, the Utah-based banking subsidiary of the credit-card company.

The Federal Reserve separately issued a concurrent enforcement action against parent company American Express and its subsidiaries, citing significant deficiencies in the company’s enterprise-wide anti-money-laundering compliance program.

According to the OCC, American Express National Bank failed to tailor its federally mandated anti-money laundering risk assessment to the way it actually did business.

The regulator said the bank focused too much on its “relatively narrow” demand deposit account products and services while not giving enough attention to the risks associated with its “more dominant” credit and charge card products.

The bank also experienced what the OCC described as “systemic breakdowns” in its processes for monitoring and reporting suspicious activity.

Those deficiencies led to failures to identify and report roughly $13 billion in suspected trade-based money-laundering activity, including card charges and repayments associated with those charges, according to the OCC.

Trade-based money laundering generally involves using commercial transactions to disguise the proceeds of crime or move illicit value, including through manipulating the price, quantity, or quality of goods involved in trade.

In some cases, the transactions involved accounts associated with bank insiders, according to the OCC.

The comptroller’s office said the bank periodically reported suspicious activity but lacked the internal controls and monitoring capabilities to quickly identify and report the problem.

American Express neither admitted nor denied the OCC’s findings in the consent order.

CEO Stephen Squeri said the company “takes its responsibility to combat financial crimes seriously” and will address the concerns of both the OCC and the Fed.

“While we have made meaningful progress, we know there is more work to do,” Squeri said.

Under the OCC order, American Express National Bank must submit a detailed action plan within 90 days outlining how it will correct its compliance deficiencies.

The bank is also required to strengthen its Bank Secrecy Act and anti-money-laundering risk assessment process, as well as its customer due diligence and risk-identification programs.

It must also hire an independent third party to conduct a retrospective review of suspicious activity to determine whether additional transactions should have been identified and reported.

“The OCC expects banks of American Express’s size and complexity to devote sufficient resources to ensure compliance with laws and regulations designed to detect and prevent money laundering, which are critical to both economic and national security,” Comptroller of the Currency Jonathan Gould said.

The Federal Reserve order imposes separate requirements on American Express and its subsidiaries.

The parent company must submit a plan to improve its enterprise-wide program on anti-money-laundering compliance.

American Express Travel Related Services, meanwhile, must submit a separate plan addressing compliance with sanctions administered by the Treasury Department’s Office of Foreign Assets Control.