OCC Orders Wells Fargo To Fix Lapses In Money Laundering Controls

Office of the Comptroller of the Currency (OCC) on Thursday revealed an enforcement action on Wells Fargo Bank due to laxity in its safeguards against money laundering and other illegal banking transactions.

The U.S. regulator identified deficiencies relating to the bank's financial crimes risk management practices and anti-money laundering internal controls. The agency highlighted suspicious activity and currency transaction reporting, issues with customer due diligence and the bank's customer identification and beneficial ownership programs.

OCC requires the bank to take comprehensive corrective actions to enhance its Bank Secrecy Act/anti-money laundering and U.S. sanctions compliance programs.

The agency opted not to fine the bank and stated that the financial institution is already working on fixing the problems. There was just one requirement that it laid down, and that is to seek the approval of the OCC before it could expand its business, particularly in medium or high-risk areas.

"We have been working to address a substantial portion of what's required in the formal agreement, and we are committed to completing the work with the same sense of urgency as our other regulatory commitments," said the bank in a statement.

The regulator pinpointed the inadequacy of the bank to flag potentially suspicious transactions. Other than a general description of the deficiencies, the OCC did not give further details on the subject.

Since 2016, when the bank faced a scandal involving fake accounts, it has been under close scrutiny. The bank has actually spent billions in settling a number of criminal and civil charges, CNN reported.

They include schemes involving repeated misapplication of loan payments, wrongfully foreclosing homes, repossessing vehicles but in an illegal manner, and more. The regulator ordered the bank to strengthen these areas, as well as its currency transaction reporting, due diligence procedures and internal controls.

In 2023, the bank's head of retail operation, was sentenced for probation for three years. On the other hand, the former CEO was also banned from the industry.

Federal law imposes strict requirements on financial institutions to prevent inflow of money in the U.S. derived from illicit transactions and one of these is for them to hold close monitoring actions on transactions.

Chris Marinac, director of research at the capital market company Janney Montgomery Scott, said that for years, the bank has been going through a clean-up process.

"The latest move by the OCC shows that it is still very much under investigation, and I would expect that to continue," he said in a Reuters report.

Shares of Wells Fargo closed Thursday's trading down 4% at $51.57 on New York Stock Exchange.