US Bancorp to Pay About $600 Million Over Money Laundering

US Bancorp to Pay About $600 Million Over Money Laundering

U.S. Bank agreed Thursday to settle claims from federal prosecutors and watchdogs that it didn't beef up its anti-money launder efforts and attempted to hide that from regulators.

"The bank operated the program "on the cheap" by restricting headcount and other compliance resources, and then imposed hard caps on the number of transactions subject to (anti-money laundering) review in order to create the appearance that the program was operating properly", Berman said in a statement.

U.S. Bank will pay $453 million to the U.S. Treasury through the Southern District of NY; $70 million to the Financial Crimes Enforcement Network, a government agency tasked with handling money laundering cases; $15 million to the Federal Reserve; and $75 million to the Office of the Comptroller of the Currency.

"Our culture of ethics and integrity demands that we do better", said Cecere, who added, "we are confident in the strength of the (anti-money laundering) program we have in place today". The government said it would seek dismissal of the charges in two years assuming the bank carries out the reforms. Just as in the U.S. Bancorp probe, the OCC initially found fault with the company years earlier and followed up with a fine last month when the agency found Citigroup didn't do enough to fix its money-laundering safeguards.

Authorities also said U.S. Bancorp ignored repeated warnings from internal managers and external regulators about the inadequacy of its anti-money laundering program, and that it excluded critical information on thousands of reports about currency transfers it handled.

The customer, Scott Tucker, was convicted in 2013 of running an illegal payday lending operation.

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US Bancorp to Pay About $600 Million Over Money Laundering

US Bank continued to open new Tucker accounts and did not file a suspicious activity report even after learning of a Federal Trade Commission lawsuit against his businesses, doing so only after being served with a federal subpoena, prosecutors said.

The Justice Department statement said the bank overlooked several red flags from Tucker's business, including using accounts bearing the names of tribes for his personal expenses, such as a vacation home and a Ferrari racing team.

Regulators say the Minneapolis-based bank "willfully" violated the Bank Secrecy Act, failing to report suspicious activity.

The Justice Department recommended that the $453 million forfeiture be remitted to people who took out high-interest loans with Tucker.

Shares in U.S. Bancorp were down 0.0904 percent at $55.26 at 11:45 a.m. EST, in line with the Dow Jones U.S. Bank Index .DJUSBK .

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