Trouble with federal regulators continues Wells Fargo.
of Office of the Comptroller of the Currency (OCC) on Thursday (Sept. 12), Formal Agreement Work with banks to remediate deficiencies in their anti-money laundering (AML) and financial crime risk management practices.
“The formal agreement identifies deficiencies related to the bank's financial crimes risk management practices and anti-money laundering internal controls in several areas, including suspicious activity and currency transaction reporting, customer due diligence, and the bank's customer identification and beneficial ownership programs,” the federal agency said. These deficiencies include: The document states:which resulted in violations of various laws and regulations.
The agreement also mentions the need to “remediate the deficiencies identified by the OCC.” The agreement outlines a detailed plan for Wells Fargo to address and remediate those deficiencies, and includes specific provisions to strengthen various aspects of its AML program.
Wells Fargo recognized the changes that needed to be made.
“We are working to address a significant portion of the matters required by the definitive agreement and are committed to completing the work with the same urgency as our other regulatory obligations,” the bank said in a statement on Thursday. statement.
In 2018, the Federal Reserve imposed an asset cap on Wells Fargo, limiting the bank's growth, citing a range of widespread consumer fraudulent activities. The cap remains in place today. The bank is addressing these issues and working to improve its governance and controls with the aim of removing the cap.
However, this new agreement with the OCC highlights ongoing compliance issues that could complicate these efforts. It signals to regulators that banks still have significant work to do to ensure proper risk management and compliance, which could make them hesitant to lift asset caps in the near future.
According to CNBC: Report, Chris MalinakFinancial Advisor Research Director Janie Montgomery Scott“The bank has been in the process of cleaning up for years, but the OCC's latest move indicates that the bank remains under investigation, and that the investigation will continue,” he said.
The agreement requires the creation of a compliance committee to monitor Wells Fargo's adherence to the terms of the agreement. Additionally, Wells Fargo must submit an action plan within 120 days detailing corrective measures. According to the agreement, the plan must cover areas such as front-line risk management, independent risk management, independent testing, customer identification, and identification of suspicious activity.
In addition, Wells Fargo must strengthen its risk assessments, establish a data integrity program, and improve its compliance program. The agreement also prohibits Wells Fargo from entering new products, services, or markets without the OCC's prior approval unless it adequately addresses the identified deficiencies.
The document concludes with standard clauses regarding jurisdiction, general board responsibilities, and other provisions. It emphasizes that the agreement is not a binding contract with the OCC, but rather an exercise of oversight authority. Wells Fargo must submit all required reports and plans to the inspector general, and any amendments to the agreement must be in writing and approved by the OCC.
