Bloomberg News

JPMorgan Said to Face Order to Tighten Money-Laundering Controls

January 11, 2013

JPMorgan Chase & Co. (JPM:US) will become the latest big bank ordered by U.S. regulators to clean up its safeguards against money laundering, said a person briefed on the situation.

Banking regulators including the Office of the Comptroller of the Currency will soon order the largest U.S. bank to fix compliance flaws in its Bank Secrecy Act responsibilities, said the person, who declined to be identified because the talks aren’t public. The order doesn’t include monetary penalties and is similar to one issued to Citigroup Inc. (C:US) in April, the person said.

Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, and Bryan Hubbard, an OCC spokesman, declined to comment on the order.

After the 2008 credit crisis companies reduced compliance staff tasked with guarding the financial system against the flow of illicit money, banking regulators said. HSBC Holdings Plc (HSBA), Europe’s largest bank, agreed last month to pay $1.9 billion to settle a money-laundering probe by the U.S. Department of Justice and banking regulators in the U.S. and U.K. Another London-based bank, Standard Chartered Plc, was fined a total of $667 million by U.S. regulators last year for facilitating transactions with Iran in violation of sanctions.

In a separate OCC probe, Treasury Department Inspector General Eric Thorson threatened to sanction the bank if it fails to turn over documents to regulators investigating its ties to Bernard Madoff’s Ponzi scheme, giving JPMorgan a deadline of today to cooperate with the regulator.

The OCC is also investigating the 2012 trading losses in JPMorgan’s chief investment office and is preparing an enforcement action, according to another person briefed on the situation who asked not to be named because the matter isn’t public. The cease-and-desist order would require the bank to fix internal risk controls, the person said.

To contact the reporters on this story: Jesse Hamilton in Washington at jhamilton33@bloomberg.net; Dawn Kopecki in New York at dkopecki@bloomberg.net

To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net


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Companies Mentioned

  • JPM
    (JPMorgan Chase & Co)
    • $58.74 USD
    • 0.68
    • 1.16%
  • C
    (Citigroup Inc)
    • $51.8 USD
    • 0.39
    • 0.75%
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