Monday, Sep 17, 2012 3:36 PM UTC

U.S. banks targeted in money-laundering probe

Wells Fargo and JPMorgan are among the firms getting a close look

A new probe into money laundering will take aim at major U.S. banks, including JPMorgan Chase, according to reports from Reuters and the New York Times Monday. The inquiry, by the Treasury Department’s Office of the Comptroller of the Currency, will examine lapses in systems, which are intended to safeguard against drug cartels and sanctioned parties moving money through the U.S. financial system.

According to the Times:

[O]fficials say they are beginning one of the most aggressive crackdowns on money-laundering in decades, intended to send a signal to the nation’s biggest banks that weak compliance is unacceptable.

JPMorgan, the largest U.S. bank, is reportedly a focus of the probe, having incurred accusations from federal authorities over transferring money last year in violation of U.S. sanctions against Cuba and Iran. Reuters stressed in its report, however, that “the exact scope of the inquiry and the seize of potential liabilities for the bank [JPMorgan] could not be learned.”

Recent money-laundering probes have focused on European financial institutions. British bank HSBC, for example, is currently in settlement talks with U.S. regulators after a Senate committee found drug cartels and terrorist groups had found access to U.S. financial systems through the bank.

However, U.S. banks have also been found responsible for laundering money in recent years. A 22-month investigation by the Drug Enforcement Administration, the Internal Revenue Service and others revealed how “billions of dollars of cartel cash” was laundered through Wachovia, now part of U.S. financial leviathan Wells Fargo.

According to the Times, compliance experts say the new “surge in investigations” into laundering “is now coming because authorities were previously inundated with problems stemming from the 2008 financial turmoil.” A consultant who advises banks on money-laundering compliance told the Times, “These issues may have been put on hold during the financial crisis, and now regulators can go back to focus on money-laundering and other compliance problems.” Such a statement, with the insinuation that probes into the financial crisis are over, will bristle activists and banking regulation advocates.

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