Capital One Must Reach Into Its Wallet
Capital One, best known for its credit card business, has been fined $390 million to settle a FinCEN investigation into its anti-money laundering practices between 2008 and 2014. The bank admitted to willfully violating anti-money laundering requirements by failing to file thousands of suspicious activity reports (SARs) and currency transaction reports (CTRs) related to a business unit it had acquired as part of North Fork Bank in 2006. The unit serviced a portfolio of check-cashing businesses, some of which were associated with organized crime. The business unit was subsequently shut down in 2014.
In a released statement, FinCEN described the violations as "both willful and negligent." Capital One's investigations into the suspicious activity were weak and failed to report questionable activity to FinCEN even after the bank was aware of criminal charges against specific customers. The Director of FinCEN, Kenneth A. Blanco, remarked, "Today’s action should serve as a reminder to other financial institutions that FinCEN is committed to protecting our national security and the American people from harm and we will bring appropriate enforcement actions where we identify violations.”
FinCEN gave Capital One credit for the $100 million penalty it paid in 2018 for deficiencies in its Banking Secrecy Act (BSA) and AML programs, bringing the net amount to $290 million. In determining the amount of the fine, FinCEN cited Capital One's significant steps to correct its failings and enhance its AML processes over recent years. It also noted the bank's cooperation in the investigation by providing extensive and well-organized documentation. FinCEN strongly encourages financial institutions and other businesses and individuals subject to the BSA to self-disclose any violations of FinCEN’s regulations and cooperate with its enforcement investigations.
In addition to the $290 million this year and $100 million in 2018, previous penalties paid by Capital One include an $80 million penalty in 2020 for a data breach and $210 million in 2012 for deceptive marketing practices related to credit monitoring services.
To dig deeper into these stories, check out the following links:
FinCEN Announces $390,000,000 Enforcement Action - FinCEN
Capital One to Pay $80 Million Fine After Data Breach - Reuters
OCC Fines Capital One $100M Over AML Lapse - OCC
Capital One to Shell Out $210M to CFPB - Business Insider
