Major US banks are being investigated for insufficiently safeguarding against being used by drug dealers or terrorist groups to launder dirty money, it was reported Saturday.
An article in the New York Times suggested that federal and state authorities were ready to launch an aggressive crackdown on the failure to monitor transactions, in a move aimed at flagging to financial institutions that weak compliance is unacceptable.
Officials told the Times that regulators are close to taking action against JP Morgan, while other firms including Bank of America are also being investigated over perceived shortcomings when it comes to putting a check on money-laundering activities.
It comes just months after a Senate committee roundly criticised HSBC for ignoring warning signs that it was being used by money launderers and drug cartels in Mexico.
US politicians also accused HSBC of circumventing US sanctions on countries including Cuba and Iran – a charge that has also been levied against JP Morgan.
The Senate report was also highly critical of the Office of the Comptroller of the Currency (OCC), stating that the regulator needed to take "stronger action" on banks that exercise poor anti-money laundering controls.
The OCC is now leading the crackdown on non-compliant banks, according to the New York Times report.
It suggested that a "cease-or-desist" order could be issued against JP Morgan in the coming months, forcing the bank to review its checks, and implement measures to firm up its safeguards.
Prosecutors from the justice department and the Manhattan district attorney's office are also investigating lapses at a number of financial institutions, it was reported.
If action is taken against JP Morgan it will comes as a further blow to a bank still reeling from a $5.8bn trading loss that led to a political firestorm in the US and led to a tighter regulation of Wall Street.
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