Former U.S. Bank Risk Officer Fined $450K for AML Compliance Failures

Former U.S. Bank Risk Officer Fined $450K for AML Compliance Failures

The Financial Crimes Enforcement Network (FinCEN) has assessed a $450,000 civil money penalty against Michael LaFontaine, former chief operational risk officer at U.S. Bank, for his failure to prevent violations of the Bank Secrecy Act (BSA) during his tenure.

According to the FinCEN order, Michael LaFontaine at various times had responsibility for overseeing U.S. Bank’s anti-money laundering (AML) compliance function. During his time with the bank, LaFontaine held roles of increasing responsibility, as chief compliance officer from 2005 through 2010, followed by senior vice president and deputy risk officer, and finally to executive vice president (EVP) and chief operational risk officer.

In his role as EVP and chief operational risk officer, LaFontaine reported directly to the chief executive officer and had direct communications with the board of directors. As chief operational risk officer, he oversaw the bank’s AML compliance department, with supervisory responsibility over the bank’s CCO, AML officer, and AML staff.

Although U.S. Bank used automated transaction monitoring software to spot suspicious activity, FinCEN said, the bank capped the number of alerts generated, limiting the ability of law enforcement to target criminal activity. In addition, the bank failed to staff a compliance function with enough people to review alerts.  “Mr. LaFontaine was warned by his subordinates and by regulators that capping the number of alerts was dangerous and ill-advised,” said Kenneth Blanco, FinCEN director.

Because of his oversight roles, the complaint alleges, LaFontaine shared responsibility for the bank’s violations of the requirements to implement and maintain an effective AML compliance program and file in a timely manner Suspicious Activity Reports (SARs), as required by the BSA. In 2018, FinCEN, with the Office of the Comptroller of the Currency (OCC) and the Department of Justice, issued a $185 million civil money penalty against U.S. Bank for its role in these violations.

The assessment is only the second time FinCEN has assessed a civil money penalty against an individual for BSA violations based on alleged shortcomings of the AML program that the individual was charged with overseeing.

March 16th, 2020|