The Office of the Comptroller of the Currency (OCC) and the Federal Reserve [official websites] are expected next week to issue a cease-and-desist order to JPMorgan Chase & Co. [official website] to improve its systems and procedures for monitoring transactions and risk. While It is not yet expected that the bank will be fined [Reuters report], the Treasury Department's anti money-laundering unit, the Financial Crimes Enforcement Network (FinCEN) [official wesbites], may undertake a separate action against JPMorgan. This inquiry into JPMorgan began several months ago. Regulators must issue cease-and-desist orders after they have instructed a bank to fully comply with the Bank Secrecy Act [text] and the bank has failed to do so. The order can require a bank to review its past transactions and determine if it missed finding any suspicious activity that it should have reported to a regulatory agency, and with a high enough level of under reporting, regulators can issue civil fines. Additionally, although no action is expected from U.S. prosecutors yet, the OCC usually informs the US Department of Justice (DOJ) [official website] of inquiries like JPMorgan's.
JPMorgan has faced numerous lawsuits regarding its business practices. Earlier this month, the National Credit Union Administration (NCUA) [official website] filed [JURIST report] a lawsuit against JPMorgan for the sale of $2.2 billion of faulty residential mortgage-backed securities (RMBS) to credit unions. In December the NCUA brought a suit [JURIST report] against JPMorgan for RMBS products sold by Bear Stearns, which was also subsequently purchased by JPMorgan. In July JPMorgan agreed to a $100 million settlement [JURIST report] in a suit brought by customers claiming unreasonable fees and a three percent increase on monthly minimum payments by credit card holders. In early June the firm was granted [JURIST report] permission to pay $44.6 million to resolve allegations of fraudulent bidding practices for state and local government investment securities at taxpayers' expense. The settlement followed JPMorgan's agreement [JURIST report] last July with the DOJ to pay $228 million to federal and state authorities. One month earlier JPMorgan again settled [JURIST report] at $153.6 million for fraud charges brought by the Securities and Exchange Commission (SEC) [official website] for misleading investors during the housing crises.