US Bank pays $613 million over money laundering charges

Bank branch in Omaha Neb. U.S. Bancorp said Thursday Feb. 15 2018 that it will pay $613 million in fines and penalties to settle allegations that the bank had poor anti-money laundering controls

U.S. Bank on Thursday agreed to pay $613 million as part of a deferred prosecution agreement with federal prosecutors and bank regulators over alleged failings of its anti-money laundering programs, including an effort to hide those deficiencies from its regulator and processing transactions for disgraced payday lending mogul and race vehicle driver Scott Tucker.

This undated image on U.S. Bancorp's website shows a branch of U.S. Bank, a subsidiary.

The Minneapolis-based bank, the nation's fifth largest, will pay a total of $613 million, including $528 million in a deferred prosecution agreement with the US attorney in Manhattan, who announced the company had made two felony violations of the Bank Secrecy Act. U.S. Bancorp failed to detect large numbers of suspicious transactions and concealed its missteps from regulators, it said.

Federal prosecutors said US Bank deliberately capped the number of suspicious transaction alerts generated by its internal monitoring system from 2009 to 2014, and then hid this from the Treasury Department.

"We regret and have accepted responsibility for the past deficiencies in our [anti-money laundering] program", US Bancorp CEO and president Andy Cecere said in a statement issued Thursday morning.

Manhattan U.S. Attorney Geoffrey Berman characterized the bank's anti-money laundering program as "highly inadequate". The banks Anti-Money Laundering Officer says the program is an effort to "use "smoke and mirrors" to 'pull the wool over the eyes, '" of one regulatory agency.

Tucker's business "maintained certain deposit accounts with U.S. Bank National Association", the company reported.

"Our culture of ethics and integrity demands that we do better".

Authorities also charged that the bank willfully failed to report suspicious banking activities of a longtime customer, Scott Tucker, from 2011 to 2013.

Authorities said that U.S. Bank staffers responsible for servicing the Tucker-linked accounts disregarded red flags, including tens of millions of dollars spent on his professional Ferrari racing team and on a vacation home in Aspen, Colorado.

U.S. Bancorp said it has fully reserved for the financial penalties and faces "no further financial impact". The deferred prosecution agreement provides for a $528 million forfeiture by US Bancorp.

Under the settlement, the Justice Department agreed to dismiss the charges against the Minneapolis-based bank in two years if it meets the terms of the agreement.

That agreement is subject to approval by a federal court judge in NY.

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