U.S. Bancorp Deferred Prosecution Agreement: What You Need to Know
On May 20, 2020, U.S. Bancorp, the parent company of U.S. Bank, entered into a deferred prosecution agreement (DPA) with the United States Department of Justice (DOJ) regarding the bank’s violations of the Bank Secrecy Act (BSA). This agreement comes after years of investigation about the bank’s failure to comply with anti-money laundering regulations, which put the bank and its customers at risk of financial crimes.
What is a Deferred Prosecution Agreement?
A deferred prosecution agreement is a legal agreement between an organization and a prosecutor that suspends criminal charges for a specified period. During this time, the organization is required to adhere to strict terms and conditions, including the payment of fines and restitution, implementation of compliance programs, and cooperation with ongoing investigations. If the organization complies with the agreement, the prosecutor will dismiss the charges at the end of the term.
What Were the Violations?
The DOJ’s investigation found that U.S. Bank failed to maintain an effective anti-money laundering program, which is required by law for all financial institutions. The bank also failed to file timely suspicious activity reports (SARs) for high-risk transactions and customers, which impeded law enforcement’s ability to detect and prevent criminal activity. Furthermore, the bank’s internal controls were inadequate, and its personnel lacked sufficient training about the BSA’s requirements.
What are the Terms of the DPA?
Under the terms of the DPA, U.S. Bancorp will pay a total of $613 million, which includes a fine of $453 million and $60 million in restitution to the victims of the scheme. The bank has also agreed to undergo an independent review of its compliance programs and to implement necessary enhancements. Additionally, the bank has committed to cooperating with ongoing investigations, including providing all relevant documents and information, and notifying the DOJ of any other criminal activity that may come to light during the term of the agreement.
What Happens Next?
U.S. Bancorp has two years to comply with the terms of the DPA. During this time, the bank will be closely monitored by the DOJ to ensure that it is fulfilling its obligations. If the bank fails to comply with the agreement, the DOJ can prosecute it for the original charges, which could result in significant fines and reputational damage.
What Does This Mean for U.S. Bank Customers?
Customers of U.S. Bank should not be directly affected by the DPA. However, the bank’s failure to comply with anti-money laundering regulations put its customers at risk of financial crimes, such as fraud and identity theft. By entering into the DPA, U.S. Bancorp has committed to improving its compliance programs to better protect its customers and prevent future illegal activity.
Conclusion
The U.S. Bancorp deferred prosecution agreement is a significant development in the fight against financial crimes. This agreement sends a clear message that financial institutions must comply with anti-money laundering laws and regulations, or face the consequences. U.S. Bancorp has committed to implementing necessary changes to its compliance programs, which will improve its ability to detect and prevent financial crimes. As customers of U.S. Bank, we should expect nothing less than the highest standards of compliance and accountability from our financial institutions.