On March 4, 2020, the Financial Crimes Enforcement Network (FinCEN) assessed a $450,000 civil money penalty against the former Chief Operational Risk Officer, Michael LaFontaine, at U.S. Bank for his failure to prevent BSA/AML violations while employed at the bank. In their release, FinCEN explains that U.S. Bank used automated transaction monitoring software to spot potentially suspicious activity but improperly capped the number of alerts generated. In addition, FinCEN states that while under the former risk officer’s leadership, the bank failed to staff the BSA compliance function with enough people to review even the reduced number of alerts.
FinCEN explains that Mr. LaFontaine was advised by two subordinates that they believed the existing automated system was inadequate because caps were set to limit the number of alerts. As stated by FinCEN: “Mr. LaFontaine received internal memos from staff claiming that significant increases in SAR volumes, law enforcement inquiries, and closure recommendations, created a situation where the AML staff ‘is stretched dangerously thin.’ Mr. LaFontaine failed to take sufficient action when presented with significant AML program deficiencies in the Bank’s SAR-monitoring system and the number of staff to fulfill the AML compliance role.”
FinCEN also explained that U.S. Bank had maintained inappropriate alert caps for at least five years and the OCC warned U.S. Bank on several occasions that using numerical caps to limit the Bank’s monitoring programs based on the size of its staff and available resources could result in a potential enforcement action, as FinCEN had taken previous public actions against banks for the same activity.
This personal fine to the former risk officer comes just a few weeks after FinCEN, the OCC and DOJ issued a $185 million civil money penalty against U.S. Bank for, among other things, willfully violating the BSA’s requirements to implement and maintain an effective anti-money laundering (AML) program and to file Suspicious Activity Reports (SARs) in a timely manner.
The full FinCEN release can be found here.
