JPMorgan faces US order on laundering controls Bank may not have to pay monetary penalty: sources

NEW YORK, Jan 11, (RTRS): US 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 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, also could take a separate action against the bank, they said.
A JPMorgan spokeswoman declined to comment.
Britain-based bank Standard Chartered Plc agreed to pay a total of $667 million to US 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 US inquiry.
In April, the Office of the Comptroller of the Currency (OCC) identified major lapses in compliance systems at US bank Citigroup Inc, which did not pay a monetary penalty.
The JPMorgan inquiry 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 the largest US bank agreed to pay $88.3 million to settle Treasury Department allegations that it engaged in prohibited transactions linked to Cuba and Iran.
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 US prosecutors, the OCC typically informs the Justice Department when it undertakes inquiries of this sort, 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 John Hawke. Now a partner at Arnold and Porter in Washington, he said he had no knowledge of the specific case.
Meanwhile  group of 10 mortgage servicers  earlier in the week  agreed to pay a total of $8.5 billion to end a U.S. government-mandated case-by-case review of housing crisis foreclosures in an  acknowledgement the program had proven too cumbersome and expensive.
The reviews followed the “robo-signing” scandal that emerged in 2010 involving allegations banks pursued faulty foreclosures by using defective or fraudulent documents.
Bank of America said it supports the new approach “because it expands the number of borrowers who will receive payment, speeds the delivery of those payments, and will provide support for homeowners still struggling to make payments.”


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