Capital One Financial was hit with a $ 290 million penalty after admitting to the US Treasury Department that it intentionally violated anti-money laundering requirements between 2008 and 2014.
The problems, which involved a unit serving cash-checking companies that have since been closed, were first revealed years ago. But documents released by the Treasury’s Financial Crimes Enforcement Network on Friday contained new details, including Capital One’s admission that it did not report suspicious activity even when it knew about criminal charges against certain customers.
“The failures highlighted in this enforcement action are flagrant,” Fincen director Kenneth Blanco said in a press release. “Capital One intentionally ignored its legal obligations in a high-risk business unit.”
Bloomberg
A Capital One spokesman said in an email that the McLean, Virginia-based company is excited to solve the problem, calling it the last remaining government investigation into a business that has disappeared and said the company was fully reserved to pay the nine-digit penalty.
“Capital One takes its anti-money laundering obligations very seriously,” the company spokesman said. “The Bank has invested heavily in improving its AML program in recent years under the new AML leadership and has worked closely with regulators and law enforcement to ensure that our compliance processes and protocols are robust and thorough.”
Capital One acquired the check collection group at the 2006 acquisition of North Fork Bank in New York. The unit’s customers included dozens of cashiers in New York and New Jersey, according to a document that Fincen made public on Friday. Services that the unit included was the processing of checks and cash deliveries for armored cars.
Capital One has acknowledged errors involving foreign exchange reporting, which banks must submit to the government when customers make cash transactions in excess of $ 10,000. The $ 422 billion asset admitted to being negligent when it failed to report on about 50,000 transactions, totaling more than $ 16 billion.
Capital One also admitted that it failed to file suspicious activity reports in connection with Domenick Pucillo, who owned numerous check cashing companies in the New York area. Pucillo was described by Fincen on Friday as a convicted member of the Genoese family of organized crime and the fourth largest customer of Capital One’s business unit that served cashiers.
The bank learned in 2013 about potential criminal charges against Pucillo in New Jersey. However, Capital One later allowed Pucillo to make more than $ 20,000 worth of $ 160 million through 23 deposit accounts, according to Fincen.
Capital One closed the commercial banking unit that served check cashing businesses in 2014. Five years later, Pucillo pleaded guilty to conspiring to launder money in connection with illegal gambling loans and proceeds. Capital One, Fincen said.
“Capital One’s huge failures have allowed known criminals to uncontrollably use and abuse our nation’s financial system, encouraging criminal activity and allowing it to continue and flourish to the detriment of victims and other citizens,” Blanco said. “Such failures of financial institutions, regardless of their size and believed influence, will not be tolerated.”
Fincen said that Capital One had taken significant steps to cooperate with its investigation and to remedy the problems, which it had taken into account in determining the amount of the fine assessed. The civil fine totaled $ 390 million, but Capital One received $ 100 million for a penalty it paid to the Currency Controller’s Office in 2018.
OCC imposed enforcement action on Capital One in 2015 in connection with compliance against money laundering within the same business unit. The consent order was closed in 2019.