FinCEN’s $390 Million Case Against Capital One – And What It Means For AML Enforcement
Seetha Ramachandran and Hena Vora, 29 March 2021
As the financial services industry prepares for expanded criminal and civil enforcement under the Bank Secrecy Act (“BSA”) with the passage of the Anti-Money Laundering Act of 2020, FinCEN’s recent case against Capital One shows how FinCEN’s approach to AML enforcement is evolving.
On January 15, 2021, FinCEN assessed a $390 million civil money penalties against Capital One for violations of the BSA related to Capital One’s Check Cashing Group (the “CCG”). CCG is a business unit under Capital One’s commercial bank through which Capital One provides banking services including processing checks and providing customers with armored car cash shipments. In issuing its decision, FinCEN determined that, between 2008 and 2014, Capital One’s CCG failed to report millions of dollars in suspicious transactions. Specifically, FinCEN found that Capital One:
failed to maintain an AML program to guard against money laundering as per 31 U.S.C. § 5318(h); failed to file suspicious activity reports (SARs) on suspicious transactions in violation of 31 U.S.C. § 5313; and failed to file currency transaction reports (CTRs) for the CCG in violation of 31 U.S.C. § 5313.
The enforcement action is noteworthy because it is one of very few cases that FinCEN has charged against a major financial institution, where no other government agency, such as DOJ, OFAC, or the SEC, has charged a parallel case. It signals a shift for FinCEN, an agency that has historically been known for its role in administering the BSA and issuing rules and guidance to covered industries. Though we have seen FinCEN take a far more aggressive role in filing its own enforcement action under the BSA over the past decade, it typically does so on the heels of another criminal or regulatory matter. Thus, the Capital One settlement signals that FinCEN is not only filing its own cases – it is also likely taking a more active, investigative role.
The Capital One settlement also illustrates what factors FinCEN takes into account when bringing an enforcement action. As we shared with you last year, FinCEN issued a rare statement putting the financial industry on notice of the factors that guide its enforcement decisions. Unlike criminal cases under the BSA, which require the government to prove intentional, willful violations of the statute, the evidentiary standards that govern FinCEN’s enforcement actions are murkier and merely require reckless disregard.