Federal regulators have fined American Express $350 million for critical shortcomings in its anti-money laundering controls. The Office of the Comptroller of the Currency (OCC) cited the company for failing to detect approximately $13 billion in suspicious activity over more than a decade. The penalty comes with a cease-and-desist order targeting American Express National Bank, the credit-card company's Utah-based banking subsidiary.
The OCC found that American Express National Bank did not adequately assess its AML risks, focusing too heavily on its demand deposit accounts while neglecting its credit and charge card products. Systemic breakdowns in monitoring and reporting suspicious activity led to the failure to identify and report $13 billion in trade-based money laundering, including card charges and repayments linked to illicit transactions.
Trade-based money laundering involves disguising criminal proceeds through commercial transactions, often manipulating goods' price, quantity, or quality. The OCC noted some transactions involved accounts linked to bank insiders. American Express did not admit or deny the findings in the consent order, with CEO Stephen Squeri stating the company takes its responsibility to combat financial crimes seriously.
Under the OCC order, American Express National Bank must submit a detailed action plan within 90 days to address compliance deficiencies. The bank is also required to enhance its Bank Secrecy Act and AML risk assessment processes, along with customer due diligence programs. An independent third party will conduct a retrospective review of suspicious activity to identify any missed transactions.
The Federal Reserve has also imposed separate requirements on American Express and its subsidiaries, including improving its enterprise-wide AML compliance program and addressing sanctions compliance for its travel-related services.