Regulators from two federal agencies have slapped USAA with $140 million in fines for what they say are failures to follow anti-money-laundering laws.
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency announced their actions Thursday in separate statements.
FinCEN imposed a $140 million civil money penalty for what it calls “willful violations” of the Bank Secrecy Act, though it agreed to credit $60 million to account for the separate set of fines independently levied on the company by the Office of the Comptroller of the Currency, which cited similar problems in a consent order.
“As its customer base and revenue grew in recent years, USAA [Federal Savings Bank] willfully failed to ensure that its compliance program kept pace, resulting in millions of dollars in suspicious transactions flowing through the U.S. financial system without appropriate reporting,” FinCEN’s Acting Director Himamauli Das said in a statement.
The bank “received ample notice and opportunity” to fix its anti-money-laundering controls, he said, “but repeatedly failed to do so.”
USAA CEO Wayne Peacock said in a statement that while the “issues identified in these orders did not result in any individual member harm, we understand the importance of these requirements.”
He added, “USAA has already made progress in many critical areas by investing in new systems and training, enhancing staffing and expertise, and improving our processes. And we have an unwavering commitment to the military community.”
FinCEN makes sure banks play their part in stopping criminal financial activity, such as money laundering or funding terrorism. Banks are required by federal law to flag suspicious transactions, such as withdrawals of large amounts of cash or transfers to known criminals, and to file activity reports about these transactions with FinCEN.
The agency’s consent order says USAA Federal Savings Bank admitted willfully failing to accurately and timely report thousands of transactions involving suspicious activity. FinCEN said the bank knew as early as 2017 that its compliance program was insufficient.
In one example described in the consent order, a USAA customer based in Los Angeles, who told the bank she had a “performance art company,” engaged in $125,000 of suspicious activity, much of labeled as art purchases with a foreign individual connected to an offshore entity named in the Panama Papers. An analysis of her transactions also show expensive and unexplained international travel, as well as transactions with accounts connected to businesses “involved in public allegations of misconduct,” according to the consent order.
The bank did not report the activity until a year later, in 2020.
According to both consent orders, USAA has agreed to take steps to bring itself into compliance with the Bank Secrecy Act.
In 2020, USAA reported annual revenue of $36.3 billion and a net income of $4 billion. The fines represent 3.5% of that year’s net income.
FinCEN announced an overhaul of its anti-money-laundering program in 2020, days before a conglomerate of international media organizations released reporting on the “FinCEN Files” — a leaked trove of U.S. Treasury documents that critics said showed the government and banks doing little to stop illicit money flows.
USAA has run afoul of federal banking regulators at least twice in recent years.
In 2020, the Office of the Comptroller of the Currency fined USAA $85 million in 2020 for what it deemed unsound banking practices that did not adequately protect customers from risk.
In 2019, the Consumer Financial Protection Bureau ordered the bank to pay $3.5 million in penalties and $12 million in restitution to settle claims that it neglected stop-payment requests and reopened accounts without customers’ consent, among other claims.
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