Ah, those pesky banking penalties.  Earlier this month, JPMorgan Bank and Trust Company, N.A. agreed to pay $1.7 billion to the U.S. as a penalty and restitution for its failure to report suspicious activity involving Bernie Madoff’s investment security company and Ponzi schemes.

Additionally, Chase Bank USA, N.A. got slapped with a $461M penalty by the Financial Crimes Enforcement Network (FinCEN) for widespread deficiencies in its anti-money laundering (AML) program.

Since issuing its cease-and-desist order last year, the Office of the Comptroller of Currency (OCC) has continued to monitor the progress that JPMorgan Chase makes to correct weaknesses identified by the agency as well as its commitment to remedy the remaining deficiencies.

Financial institutions often adopt AML best practices after huge fines such as these are levied.  It makes sense that banks should be more proactive in establishing processes and more efficient ways to conduct AML reviews BEFORE they are needed.

I authored an article last year for Bank Systems & Technology with Joe Veckerelli, a managing director at Alacer, that used a case study to explain why banks sometimes avoid doing the obvious.  The reasons are varied, but it comes down to a need for cross-team collaboration to document the existing processes and the team’s willingness to buy into the deployment of a proven methodology, such as Lean Kaizen, to eliminate, revise and create new ones.

You can read the entire case study here or go directly to the site:

http://www.banktech.com/risk-management/proactively-adopting-aml-best-practices/240150922

by Richard Paxton

(Want to learn more?  Alacer’s AML experts will be attending the  19th Annual AML & Financial Crimes Conference, being held March 16-19 at the Westin Diplomat in Hollywood, FL.  Send an email to me at Richard@alacergroup.com to arrange a chat.)