American Express Bank Hit With $350M Fine Over AML Program Failures

Federal banking regulators levied a $350 million civil money penalty against American Express National Bank for inadequate anti-money laundering controls. The Office of the Comptroller of the Currency targeted the company's Sandy, Utah-based banking subsidiary in the enforcement action.

The bureau issued a cease-and-desist order alongside the fine, pointing to failures in the bank's Bank Secrecy Act and AML compliance program. The action coordinated with a separate cease-and-desist order from the Federal Reserve Board against American Express Company and American Express Travel Related Services Company.

The entire penalty will flow to the US Treasury.

The bank failed to establish and maintain a BSA/AML compliance program that met regulatory requirements, according to the OCC. Regulators found the institution had not properly tailored its risk assessment to match its business operations.

The agency highlighted several systemic weaknesses:

• Inadequate resources allocated to compliance
• Staff lacking sufficient AML expertise
• Gaps in internal controls
• Weak independent testing procedures
• Insufficient BSA/AML training for employees and directors

The bank concentrated its risk assessment on demand deposit accounts while giving insufficient attention to risks associated with its credit and charge card products, the regulator said. These misaligned priorities left major business lines inadequately monitored.

Weaknesses in risk assessments, customer due diligence processes, and customer identification procedures led to monitoring and reporting breakdowns, the OCC stated. The bank's systems failed to catch suspicious activity across its operations.

The compliance failures resulted in the bank not identifying, assessing, or sufficiently reporting approximately $13 billion of suspected trade-based money laundering activity over the past decade. Regulators described breakdowns in both the monitoring systems designed to flag suspicious activity and the reporting processes meant to alert law enforcement.

The OCC expects banks of American Express's size and complexity to devote sufficient resources to ensure compliance with laws and regulations designed to detect and prevent money laundering, which are critical to both economic and national security.

Comptroller of the Currency Jonathan Gould said the bank failed to maintain a BSA/AML compliance program properly aligned with the money laundering risks of its operations.

American Express failed to maintain a BSA/AML compliance program properly aligned with the money laundering risks of its operations, which resulted in the bank's failures to timely identify and report significant missed suspicious activity and to provide important information to law enforcement. Today's actions will serve to focus American Express on properly addressing such risks as it continues to serve its customers.

American Express did not admit or deny the regulators' findings, Reuters reported.