Minneapolis-based U.S. Bank, the fifth largest bank in the country, has been ordered to pay $613 million to federal authorities over its lax anti-money laundering controls.
Some $528 million of that comes from a deferred prosecution agreement with the U.S. Attorney of Manhattan, which ordered the bank to clean up its anti-money laundering programs.
In total, the bank will pay $453 million to the Justice Department, $75 million to the Office of the Comptroller of the Currency (OCC), $70 million to the Financial Crimes Enforcement Network and $15 million to the Federal Reserve Board.
U.S. Bank was charged with two felony violations of the Bank Secrecy Act for "willfully failing to have an adequate anti-money laundering program and willfully failing to file a suspicious activity report."
First came the crime, then came the cover-up
The Manhattan U.S. Attorney Geoffrey S. Berman says that between 2009 and 2014, U.S. Bancorp failed to detect and investigate "large numbers of suspicious transactions" and other activities that would have otherwise raised money laundering red flags.
The bank slashed positions in its anti-money laundering department, running its program "on the cheap by restricting headcount," and then capped the number of transactions that should have been subject to anti-money laundering reviews "in order to create the appearance that the program was operating properly."
To make matters worse, the bank "deliberately concealed" this from the OCC, its primary regulator.
It was hit with criminal charges as a result, but these will be stayed for 2 years and then dropped provided the bank pays the required fines and reforms its anti-money laundering program.
"We regret and have accepted responsibility for the past deficiencies" in the anti-money laundering program, U.S. Bancorp's president and CEO, Andy Cecere, said in a statement to CNBC. "Our culture of ethics and integrity demands that we do better."
The fine levied on U.S. Bank dwarfs the $185 million Wells Fargo was ordered to pay for opening 2.1 million accounts and credit lines on behalf of customers without their consent.
Reuters reports though that regulators could have fined Wells Fargo as much as $10 billion, but settled on the smaller amount in order to push through the prosecution quickly.