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BSA Invoked in JPMorgan Chase $1.7B to Madoff Ponzi Victims
WASHINGTON (1/8/14)--JPMorgan Chase & Co. has entered into a deferred prosecution agreement with the U.S. Attorney's Office for the Southern District of New York and agreed to forfeit $1.7 billion to the U.S. government to resolve claims that it had a role in enabling Bernard Madoff's infamous and extensive Ponzi scheme, the Office of the Comptroller of the Currency noted in a release Tuesday.
 
The OCC said the $1.7 billion is concurrent with its own assessed $350 million civil money penalty against JPMorgan Chase, N.A., JPMorgan Bank and Trust Company, N.A., and Chase Bank USA, N.A., for Bank Secrecy Act (BSA) violations.
 
The agency added it also is concurrent with a Financial Crimes Enforcement Network assessed $461 million civil money penalty that is also "deemed satisfied" by the forfeiture to the U.S. government.

The OCC said its penalty follows a January 2013 cease and desist order in which the agency directed the three affiliated banks to correct deficiencies in their compliance programs.

The OCC said it found "critical and widespread deficiencies in the banks' BSA and anti-money laundering compliance programs with respect to suspicious activity reporting, monitoring of transactions for suspicious activity, the conduct of customer due diligence and risk assessments, and internal controls and independent testing."

Although the OCC release said the penalty is based in part on JPMorgan Chase's failure to report suspicions about Bernard L. Madoff Investment Securities, LLC, to U.S. law enforcement and regulators--despite having alerted United Kingdom authorities in the months prior to Madoff's arrest--the banks also "failed to detect and report other cases of suspicious activity."
 
The bank regulator said it continues to monitor JPMorgan Chase's efforts to correct weaknesses identified by the agency as well as the bank's ongoing work and commitment to remedy the remaining deficiencies. "We will continue our oversight efforts and take further action as warranted," it noted.
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