[ by Howard Haykin ]

JPMorgan Chase Latest U.S. bank examined in widening probe.

The Office of the Comptroller of the Currency ("OCC") currently is examining the anti-money laundering practices of JPMorgan Chase, as they pertain to preventing cash flow transactions involving drug money and sanctioned countries.  The OCC is an independent branch within the Treasury Department.

Neither JPM nor the OCC have disclosed the exact scope of the inquiry and the size of potential liabilities for the bank.  JPMorgan did refer to an AML regulatory review in its Form 10Q filed last month with the SEC.  In that note, JPMorgan said it expects heightened scrutiny by regulators of its compliance with new and existing regulations, including AML laws.

Focus Area of Justice Department.  The latest investigation comes in the midst of stepped-up efforts by regulators to crack down on money laundering, including transfers of drug money through bank networks and funds from countries facing international sanctions such as Iran.  The Department of Justice has moved aggressively in this area because it wants to ramp up the number of criminal cases it brings under the Bank Secrecy Act, a law that requires financial institutions and their employees to take steps to prevent money laundering. 

Recent Areas of Concern, Cases.   For one thing, U.S. regulators now are paying special attention to potential money laundering transactions tied to Venezuela, according to one source.  Earlier this summer, British bank HSBC Holdings Plc set aside $700 million in expectation that they may be heavily sanctioned or will have large settlement deals to arrange.  That's not surprising, because a U.S. Senate report criticized HSBC as maintaining a "pervasively polluted" culture.

In addition, a Senate panel examined transactions tied to Mexico, Iran, the Cayman Islands and Saudi Arabia. And last month, New York's banking regulator negotiated a $340 million settlement with Standard Chartered Plc, after the  regulator investigated the British bank's transactions tied to Iran.

Smaller cases have been conducted by the OCC, targeting how banks clear checks potentially tied to shadowy money transactions through a process called remote-deposit capture.  In April, the OCC identified a number of AML deficiencies at Citigroup Inc. – which included a monitoring gap tied to Citigroup's remote deposit capture business.  At the time, Citigroup said it had fixed the deficiencies or was in the process of doing so.

For further details, go to:   [ Reuters, 9/15/12 ].