The Financial Crimes Enforcement Network (FinCEN) late Friday (Jan. 15) announced that it is assessing a $390 million penalty against Capital One for engaging in what it says are “both willful and negligent violations” of the Bank Secrecy Act (BSA).
According to a statement from FinCEN, Capital One admitted to failing to implement and maintain an effective anti-money laundering (AML) program. It also said the bank’s Check Cashing Group admitted that it failed to file thousands of suspicious activity reports (SARs) as well as thousands of Currency Transaction Reports (CTRs) from 2008 to 2014. These violations, said FinCEN, “caused millions of dollars in suspicious transactions to go unreported in a timely and accurate manner, including proceeds connected to organized crime, tax evasion, fraud, and other financial crimes laundered through the bank into the U.S. financial system.”
The statement from FinCEN said Capital One established the Check Cashing Group as a business unit within its commercial bank in 2008. The group was comprised of between approximately 90 and 150 check cashers in the New York and New Jersey area. Capital One provided banking services to the group and became aware of compliance and money-laundering risks associated with the group’s customers. Despite warnings and internal assessments, FinCEN said Capital One’s process for investigating suspicious transactions was “weak” and failed to detect and report suspicious activity by the group’s customers.
The statement goes on to say that Capital One failed to file suspicious activity reports despite knowing of criminal charges against specific customers, including Domenick Pucillo, a convicted associate of the Genovese organized crime family.
“Capital One was made aware of Pucillo’s participation in potential criminal activity and other risks on several occasions, including learning in early 2013 about potential criminal charges in two different jurisdictions,” the FinCEN statement said. “Despite this information, Capital One failed to timely file SARs on suspicious activity by Pucillo’s check cashing businesses, and continued to process over 20,000 transactions valued at approximately $160 million, including cash withdrawals, for Pucillo’s businesses. According to public sources, in May 2019 Pucillo pleaded guilty to conspiring to commit money laundering in connection with loan sharking and illegal gambling proceeds that flowed through his Capital One accounts.”
In determining the $390 million penalty, FinCEN said it considered Capital One’s cooperation with its investigation as well as its investments in its AML program over the past several years.