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JPMorgan Chase, BOA Subject to New Money Laundering Probe

by , September 17, 2012. (Posted in: Banking / Personal Finance News)


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Just as the dust begins to settle each time Jamie Dimon makes a controversial statement, once again, global eyes are on not only his bank, JPMorgan Chase, but at least one other – Bank of America – as federal regulators are investigating an alleged money laundering probe that accuses them of failing to monitor transactions. They say this was an opening for criminals to easily launder money. The federal agency overseeing this new investigation is the Office of the Comptroller of the Currency.

There’s only one person talking – and he’s talking to the New York Times and his identity remains highly protected. Neither the banks nor the government are talking.

Remember, some people say one reason the financial sector has such a poor public image is because of Dimon and his aggressive and controversial “I don’t give a damn” attitude. After the 2008 devastation, all eyes are on banks as they come under tighter scrutiny.

They’re being forced to provide much more detailed documentation these days, which is something they’re not used to having to do. The question then becomes: “If the banks say they didn’t know its customers were laundering money, why not?” And if they did know, the question for bank presidents becomes, “So you’re still that narcissistic to think you can bypass the law?”

This isn’t the only ongoing bank scandal. We’re not hearing a whole lot these days from the Barclay’s brouhaha. This is the bank that was accused of manipulating key global interest rates and affected an entire global community. It settled charges of “improperly processing money for Iran” among others.

JPMorgan Chase also is used to this kind of negative light. This is the second scandal it’s facing this year alone. Several months ago, it blew a devastating hit to its shareholders with a massive trading loss.

Last year, JPMorgan agreed to pay $88 million to settle Treasury charges that it had illegally processed funds for countries such as Cuba, Iran, Sudan and Liberia. All the while, JPMorgan insisted it did not intentionally violate regulations.

It used the justification that it oversaw “hundreds of millions of transactions and customer records per day, and annual error rates are a tiny fraction of a percent.” But those errors are doozies.

If your favorite department store came to you and said it had made a big mistake in one of its invoices and as a result, it was going to force you to shoulder those losses, would you continue to use that department store?

If you did and three months later, it announces that it’s being investigated for taking that money and using it for illegal purposes, would that be enough to force you to choose another department store? Odds are, you would’ve back away during the first scandal, right?

That’s what’s so frustrating about these big banks. They continue to break the rules – remember, it’s these big banks that played a huge role in what ultimately became the recession that haunts us still almost five years later. Why are these banks being allowed to write their own rules time and again.

And, time and again – they’re kicking their customers in the teeth. It’s the customers who are already struggling to keep their homes, find jobs, pay their credit card balances (often to one of the big five banks) – and then they do one more ridiculously improper thing as the icing on the cake.

Hopefully, the OCC will handle this properly should it come full circle and land at the doorsteps of these banks. It’s not likely, though. Did you know Citigroup faced similar charges in April? Were you aware of last year’s settlement by JPMorgan Chase for processing money for countries that are now a threat to the United States? Few people did.

It was served a cease and desist order for running its “deficient internal controls and anti money laundering procedures”. Its procedures were not enough and the sanction required the bank to change its procedures.

Citi Bank even admitted to failing to adequately monitor its transactions connected to what it referred to as “foreign correspondent banking”. Somehow, the mainstream media forgot to report that story and were it not for the whistle blower talking to the New York press, this latest scandal would likely go by unnoticed as well.

Still, it’s not likely any drastic measures will be taken by the OCC, especially if Citigroup is any indication.

The New York Times report names several other offices, too, that are in on the investigation. Those include the Justice Department and the Manhattan district attorney’s office. Both also declined to comment.

Be sure to check back often as we will follow this as closely as we can. What are your thoughts? Should there be more public scrutiny? Should there be tougher consequences as a result of these types of investigations?

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