Capital One Financial was hit with a $ 290 million fine after admitting to the U.S. Treasury Department that it deliberately violated money laundering requirements between 2008 and 2014.
The problems, which involved a unit that served cash check deals and has since been closed, were first revealed years ago. But the documents released on Friday by the Treasury’s Financial Crimes Enforcement Network contained new details, including Capital One’s admission that it did not file reports of suspicious activity, even when it knew about criminal charges against specific clients.
“The flaws described in this inspection action are striking,” said Fincen director Kenneth Blanco in a press release. “Capital One deliberately disregarded its obligations under the law in a high-risk business unit.”
Bloomberg
A spokesman for Capital One said in an email that the McLean, Va-based company is pleased to resolve the matter, calling it the last remaining government inquiry into a now defunct business, and saying the company was fully reserved to pay the nine digit penalty.
“Capital One takes its anti-money laundering obligations very seriously,” said the company’s spokesman. “The bank has invested heavily in improving its AML program in recent years, under the new leadership of AML, and has worked closely with regulators and law enforcement officials to ensure that our compliance processes and protocols are robust and complete.”
Capital One acquired the check cashing group in its 2006 purchase of New York-based North Fork Bank. The unit’s customers included dozens of check casters in the New York and New Jersey areas, according to a document that Fincen made public on Friday. Services that the unit included processing checks and remittances in armored cars.
Capital One has acknowledged errors involving reporting of monetary transactions, which banks are required to register with the government when customers conduct cash transactions in excess of $ 10,000. The $ 422 billion asset admitted that it was negligent in not filing reports on about 50,000 transactions, totaling more than $ 16 billion.
Capital One also admitted that it did not file reports of suspicious activity in connection with Domenick Pucillo, who owned several check cashing companies in the New York area. Pucillo was described on Friday by Fincen as a convicted member of the Genovese organized crime family and the fourth largest client in the Capital One business unit who served check casters.
The bank became aware in 2013 of possible criminal charges against Pucillo in New Jersey. However, Capital One subsequently allowed Pucillo entities to conduct more than 20,000 transactions worth approximately $ 160 million through 23 deposit accounts, according to Fincen.
Capital One closed the commercial bank unit that served check-discounted business in 2014. Five years later, Pucillo pleaded guilty to conspiracy to launder money in connection with loan sharks and illegal gaming proceeds that flowed through his bank accounts. Capital One, said Fincen.
“Capital One’s blatant failures have allowed known criminals to use and abuse our country’s financial system without control, fostering criminal activity and allowing it to continue and prosper at the expense of victims and other citizens,” said Blanco. “These types of bankruptcies by financial institutions, regardless of their size and accredited influence, will not be tolerated.”
Fincen said that Capital One took significant steps to cooperate with its investigation and remedy the problems, which it took into account to determine the amount of the fine imposed. The civil cash fine totaled $ 390 million, but Capital One was credited with $ 100 million for a fine that it paid to the Coin Controller Office in 2018.
OCC imposed a coercive action at Capital One in 2015 in connection with anti-money laundering compliance within the same business unit. That consent request ended in 2019.