American Express is in serious trouble. The Office of the Comptroller of the Currency (OCC) announced a $350 million fine against American Express National Bank for failing over an extended period to establish an effective anti-money laundering (AML) compliance program. As a result, about $13 billion in suspected trade-based money laundering transactions went unidentified or was not adequately reported over more than a decade.
According to the OCC’s investigation, AMEX’s AML system had a number of problems:
- About $13 billion in suspicious transactions: Over more than a decade, a large volume of suspected trade-based money laundering transactions was not identified, assessed, and adequately reported in a timely manner.
- Misguided risk assessments: AMEX focused too heavily on its relatively small deposit business and did not adequately account for the money laundering risks posed by its larger credit card and charge card businesses.
- Weak internal compliance program: This included insufficient employee expertise, gaps in internal controls, inadequate independent reviews, and insufficient AML training for employees and management.
- Breakdowns in suspicious activity reporting: Systemic problems with transaction monitoring and reporting affected the bank’s ability to provide important information to law enforcement agencies.
It is important to note that the $13 billion figure refers to the value of transactions that regulators found showed signs of suspected money laundering and were not adequately monitored and reported. It does not mean that all of the funds have been proven to be proceeds of illegal money laundering. In addition to the $350 million fine, the OCC issued a Cease-and-Desist Order to American Express National Bank. The Federal Reserve also took regulatory action against American Express Company and related entities, requiring improvements to their AML, risk management, and transaction monitoring programs.
Related sources:
- OCC: Official announcement of the $350 million fine
- Federal Reserve: Regulatory order requiring American Express to make improvements
- AMEX’s official SEC disclosure
The fine is just the outcome; the bank must have been notified to make changes well before it was announced. I suspect the previous waves of AMEX account shutdowns may have been related to Bill Pay transactions from unknown sources, and perhaps those were also connected to money laundering.
