Saturday, October 31, 2020

Former Bancorp officer fined for role in U.S money-laundering violations

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The U.S. government on Wednesday said it has hit a former risk officer at a subsidiary of U.S. Bancorp with a $450,000 civil penalty for his role in failing to prevent violations of the U.S. anti-money laundering law.

Michael LaFontaine, the former chief operational risk officer at U.S. Bank NA, admitted he failed to take steps to implement and maintain an effective compliance program to prevent money laundering, the Financial Crimes Enforcement Network (FinCEN) said on Wednesday.

U.S. Bancorp in 2018 agreed to a $613 million settlement with the U.S. Department of Justice over related charges. At the time, prosecutors said the lender failed to detect large numbers of suspicions transactions and concealed missteps from regulators.

La Fontaine admitted responsibility in failing to make sure the bank was properly staffed to meet regulations, according to a filing from FinCEN, a unit of the U.S. Department of the Treasury.

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“Mr. LaFontaine was warned by his subordinates and by regulators that capping the number of alerts was dangerous and ill-advised,” FinCEN Director Kenneth A. Blanco said in a statement.

La Fontaine did not respond immediately to calls for comment.

“Over the course of Mr. LaFontaine’s employment, and continuing until May 2015, U.S. Bank failed to establish and implement an adequate (anti-money laundering) program and to report suspicious activity,” FinCEN said.

The bank used automated transaction monitoring software to spot potentially suspicious activity, but it capped the number of alerts that software generated, FinCEN said in its statement. The improper caps were maintained for five years and curtailed law enforcement’s ability to target criminal activity, the regulator said in a separate filing.

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