11252014Tue

JPMorgan faces action on laundering controls

By Brett Wolf and Carrick Mollenkamp and Emily Flitter

NEW YORK (Reuters) - U.S. regulators are expected to order JPMorgan Chase & Co to correct lapses in how it polices suspect money flows, two people familiar with the situation said, in the latest move by officials to force banks to tighten their anti money-laundering systems.

The action against JPMorgan, which is expected as soon as Friday, would be in the form of a cease-and-desist order, which regulators use to force banks to improve compliance weaknesses, the sources said. JPMorgan will probably not have to pay a monetary penalty, one of the sources said.

 The Office of the Comptroller of the Currency and the Federal Reserve are expected to issue a cease-and-desist order, the sources said. The Treasury Department's anti money-laundering unit, the Financial Crimes Enforcement Network, could take a separate action against the bank, they said.

The status of the inquiry could change, and the timing of the action could extend to next week or later.

A JPMorgan spokeswoman declined to comment.

U.S. regulators have been cracking down on lapses at banks on their anti money-laundering controls. Banks are supposed to flag suspect transactions from sanctioned countries or those from customers with ties to drug trafficking or terrorism.

Britain's Standard Chartered Plc last year agreed to pay a total of $667 million to U.S. and state regulators to resolve anti-money laundering probes, while HSBC Holdings Plc, also headquartered in Britain, agreed in December to pay $1.9 billion to settle a U.S. inquiry.

In April, the Office of the Comptroller of the Currency identified major lapses in compliance systems at U.S. bank Citigroup Inc, which did not pay a monetary penalty.

The inquiry on JPMorgan, the biggest U.S. bank, dates back several months, the sources said.

The first public signs that JPMorgan had issues with its transaction monitoring systems emerged in August 2011. At that time JPMorgan agreed to pay $88.3 million to settle Treasury Department allegations that it engaged in prohibited transactions linked to Cuba and Iran.

A source familiar with the expected order said JPMorgan did not adequately fix dozens of anti-money laundering issues cited previously by regulators, forcing them to take formal action.

Under the order, JPMorgan is expected to be required to bolster systems it uses to monitor risk and transactions, the sources said.

Regulators enforcing U.S. anti money-laundering laws are required to issue cease-and-desist orders when they instruct a bank to correct Bank Secrecy Act compliance deficiencies and the bank fails to do so in short order. What happens after that, however, varies according to the severity of the bank's violations.

The terms of a cease-and-desist order, in some cases, can require a bank to review its prior transactions to determine whether it missed any suspicious activity it should have reported to regulators. If a high enough number of unreported suspicious transactions are found, the regulators may decide to issue a civil money penalty.

While no immediate action is expected from U.S. prosecutors, the Office of the Comptroller of the Currency typically informs the Justice Department when it undertakes inquiries of this sort, John Hawke, a former comptroller of the currency, said.

"I would think that if the agency gets to the point of issuing a cease-and-desist order that they've already been in touch with the Justice Department," said Hawke, who is now a partner at Arnold and Porter in Washington. He said he had no knowledge of the specific case.

A Justice Department spokesman declined to comment.

(Reporting by Carrick Mollenkamp and Emily Flitter of Reuters, and Brett Wolf of the Compliance Complete service Thomson Reuters Accelus; Additional reporting by Aruna Viswanatha; Editing by Lisa Von Ahn, Paritosh Bansal, Tim Dobbyn, Leslie Adler)

Search

Act of Cowardice

Iran's ruling tyrants have executed yet another political prisoner in flagrant violation of international law.  READ MORE

The rush to Tehran amidst rise in executions

World leaders should halt these visits and link any deal with Iran to its human rights record.  READ MORE

Arming a dictator

What if President Obama ordered the sale of arms to Syrian dictator to massacre his opponents? READ MORE

Slaughter intensifies under Rouhani

231 executions have occurred since the presidential election in June which brought to power Hassan Rouhani. READ MORE

Silence is not the answer

Iran: Bloody crackdown targeting dissidents aims at terrorizing the people into submission. READ MORE

Iran’s Murder Machine

The wheels of Iran's Murder Machine turn in tandem with its nuclear machine. READ MORE

What now?

The West must drop the dangerous pretence that talking to a regime not interested in listening constitutes the winning strategy. READ MORE

A facelift

This cosmetic facelift should not dupe the West into thinking that there are fresh prospects for a nuclear deal. READ MORE

An Act of Cowardice

The terrorist attack against Iranian exiles at Camp Liberty, Iraq, is another sign of Iranian regime's weakness. READ MORE

Much atalk about nothing

In Istanbul they merely agreed to talk about talking later in May in Baghdad, of all places. READ MORE

An unholy alliance

The brutal state-imposed bloodbath in Syria deserves uncompromising reproach. READ MORE

Iran cries for freedom

The clerical regime in Iran has predictably unleashed another wave of terror against the citizenry since the outburst of the latest string of mass protests beginning on 14 February. READ MORE

A new Iran policy

The latest round of nuclear talks had an all-too-familiar result: more time for Tehran and less time for the international community to prevent a nuclear-armed theocracy. READ MORE

Murder overlooked

What would the rest of us do if a mad gunman was in our midst, systematically murdering our fellow human beings in front of our eyes? The responsible amongst us would not look the other way, because that would serve as a source of encouragement for the murderers to carry on with their heinous acts unchecked. READ MORE

Standing up to Iran's executioners

The Iranian regime's malicious noose has yet again taken an innocent life. Political prisoner Ali Saremi, 63, was hanged in Tehran's infamous Evin prison after a lifetime of peacefully espousing human rights and democracy. READ MORE