The US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) has imposed a fine of $390m on credit card firm Capital One for violating the regulations under the Bank Secrecy Act (BSA).
FinCEN said that Capital One resorted to ‘willful and negligent violations’ of BSA and said that the firm ‘failed to implement and maintain’ an effective anti-money laundering (AML) programme.
Capital One confessed that it failed to file suspicious activity reports (SARs) wilfully and had negligently failed to file currency transaction reports (CTRs), with respect to its Check Cashing Group business unit, noted FinCEN.
The violations occurred between 2008 and 2014, during which millions of dollars had gone unreported in suspicious transactions.
FinCEN director Kenneth Blanco said: “The failures outlined in this enforcement action are egregious. Capital One willfully disregarded its obligations under the law in a high-risk business unit. Information received from financial institutions through the Bank Secrecy Act plays a critical role in protecting our national security, and depriving law enforcement of this information puts our nation and our people at risk.
“Capital One’s failures did just that. Capital One’s egregious failures allowed known criminals to use and abuse our nation’s financial system unchecked, fostering criminal activity and allowing it to continue and flourish at the expense of victims and other citizens. These kinds of failures by financial institutions, regardless of their size and believed influence, will not be tolerated.”
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By GlobalDataIn 2008, Capital One established Check Cashing Group as a business unit within its commercial bank. It included around 90-150 check cashers in the New York- and New Jersey-area.
Capital One offered banking services to the unit including armoured car cash shipments and processing checks deposited by the unit’s customers.
During the entire time, Capital One was aware of several compliance and money laundering risks that occurred within Check Cashing Group. This included red flags by regulators, criminal allegations against some of the customers.
The credit card firm admitted that it failed to file CTRs on nearly 50,000 cash transactions representing more than $16bn in cash handled by the customers of Check Cashing Group.
However, FinCEN acknowledged the cooperation it received from Capital One during its probe.
In addition, it noted that the firm had taken remedies measures associated with its SAR and CTR filing systems and that it had enhanced its AML programme in the past several years.
Meanwhile, recently, a report revealed that Capital One is allowing most of the employees at its US call centre for cards to work remotely even after the Covid-19 pandemic.
