Bank of America Settles OCC Cease-and-Desist Order Over Compliance Deficiencies

Bank of America announced that it has settled with the Office of Comptroller of the Currency regarding a cease-and-desist order against the bank for deficiencies related to the Bank Secrecy Act and sanctions compliance programs. The settlement does not require that Bank of America pay a fine but rather take remedial action such as appointing a compliance committee and hiring an outside consultant.

The OCC initially charged Bank of America based on violations and unsafe practices relating to these programs, including a failure to timely file suspicious activity reports and failure to correct a previously identified deficiency related to its Customer Due Diligence processes. The order also identifies deficiencies in the internal controls, governance, independent testing, and training components of the bank’s BSA compliance program.

The order requires the bank to take corrective actions to enhance its BSA/anti—money laundering (“AML”) and sanctions compliance programs, including the hiring of an independent consultant to assess the bank’s BSA/AML and sanctions compliance programs and conduct reviews to ensure all suspicious activity was appropriately reported.

The OCC found that Bank of America “had a breakdown in its policies, procedures, and processes to identify, evaluate, and report suspicious activity, including the Bank’s systemic failure to ensure that it transaction monitoring system had appropriate thresholds for determining when transaction alerts should trigger a case investigation” and that it “failed to make acceptable substantial progress towards correcting a deficiency related to the Bank’s Customer Due Diligence processes that was previously reported to the Bank by the OCC.”

This settlement should not come as a surprise to investors as Bank of America disclosed in its October filing that it has been in contact with regulators about its compliance programs and could foresee potential enforcement actions charged against the bank.

This settlement represents the OCC’s effort in combatting deficient BSA/AML compliance programs. The OCC recently imposed a $450 million fine against TD Bank for its failure to develop and maintain a BSA/AML program reasonably designed to assure and monitor compliance with the BSA. As a result of the bank’s failure, may criminal groups such as drug cartels used it to launder more than $650 million in drug money.