By AML Intelligence Correspondent
WELLS Fargo said today (Thursday) it has signed an agreement with the Office of the Comptroller of the Currency (OCC), which requires the bank enhance its AML management practices.
The agreement requires the bank to take comprehensive corrective actions to enhance its Bank Secrecy Act/anti-money laundering and U.S. sanctions compliance programs.
The Office of the Comptroller of the Currency (OCC), a top banking regulator in the United States, said this afternoon it issued the enforcement action against Wells Fargo due to deficiencies in its risk management practices.
The regulator said it identified deficiencies relating to the bank’s financial crimes risk management practices and AML internal controls.
An agreement under the enforcement action requires the lender to receive permission from the OCC before launching new business in medium- or high-risk areas for money laundering or sanctions.
Significantly, the regulator said it was not seeking any monetary penalty.
“We have been working to address a substantial portion of what’s required in the formal agreement, and we are committed to completing the work with the same sense of urgency as our other regulatory commitments,” the bank said in a statement.
In a statement the OCC confirmed the Formal Agreement with Wells Fargo Bank, N.A.
“The Formal Agreement identifies deficiencies relating to the bank’s financial crimes risk management practices and anti-money laundering internal controls in several areas including suspicious activity and currency transaction reporting, customer due diligence, and the bank’s customer identification and beneficial ownership programs,” the federal agency said.
Chris Marinac, director of research at financial adviser Janney Montgomery Scott said: “The bank has been going through a clean-up process for years and the latest move by OCC shows that it is still very much under investigation and I would expect that to continue.”
A fake accounts scandal in 2016 prompted heightened scrutiny of the bank, and led to billions of dollars in penalties and several shareholder lawsuits.
CEO Charlie Scharf has been working on boosting compliance since he took over the top job in 2019. But the bank continues to operate under a restrictive asset cap from the Federal Reserve that prevents it from growing assets beyond $1.95 trillion until regulators deem it has fixed its problems.
“There was a false optimism earlier this year… that the asset cap would be removed soon but these latest developments show that the bank still has work to do,” Marinac added.
Shares of Wells Fargo fell 4%, regaining some ground after initially dropping as much as 6.5% on the OCC news.
“This is a reputational setback. It could be a further setback when it comes to removing the asset cap as these developments show that they are still under a lot of scrutiny,” said Brian Mulberry, a client portfolio manager at Zacks Investment Management, which owns Wells Fargo stock.
“We have been working to address a substantial portion of what’s required in the formal agreement, and we are committed to completing the work with the same sense of urgency as our other regulatory commitments,” the bank said.
In its latest quarterly filing with the U.S. Securities and Exchange Commission, the bank disclosed that authorities were investigating issues related to its AML and sanctions programs.
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