Wells Fargo pledges to fix AML program after OCC deal | PYMNTS.com

Trouble with federal regulators continues for Wells Fargo.

The Office of the Comptroller of the Currency (OCC) said on Thursday (September 12) that it has signed a formal agreement with the bank to correct deficiencies in its anti-money laundering (AML) and financial crime risk management practices.

The federal agency said. These deficiencies, the document said, also resulted from violations of various laws and regulations.

The agreement also mentions the need to “remediate deficiencies identified by the OCC.” It outlined a detailed plan for Wells Fargo to address and correct these deficiencies, including specific articles devoted to improving various aspects of their AML program.

Wells Fargo acknowledged the changes needed to implement it.

“We are working to address a significant portion of what is required in the formal agreement, and we are committed to completing the work with the same urgency as our other regulatory commitments,” the bank said in a statement Thursday.

In 2018, the Federal Reserve imposed an asset limit on Wells Fargo, limiting its growth, due to widespread consumer abuse. This cap remains in place today. The bank is working to address these issues and improve its governance and controls in hopes of lifting the cap.

However, the existence of this new contract with the OCC, which highlights ongoing compliance issues, may complicate those efforts. This signals to regulators that banks still have significant work to do to ensure proper risk management and compliance, which may be hesitant to remove asset limits in the near future.

According to a CNBC report, Chris Marinak, director of research at financial advisor Janney Montgomery Scott, said: “The bank has been going through a clean-up process for several years, and the latest action by the OCC shows that it is still very much under investigation, and I hope that it will continue.”

The agreement mandates the creation of a compliance committee to oversee Wells Fargo's compliance with the terms. In addition, the bank is required to submit an action plan detailing remedial measures within 120 days. According to the agreement, the plan will cover areas such as front-line risk management, independent risk management, independent testing, customer identification and suspicious activity detection.

In addition, Wells Fargo must enhance its risk assessment, establish a data integrity program, and improve its compliance program. The agreement restricts Wells Fargo from expanding into new products, services or markets without prior OCC approval until it adequately addresses identified deficiencies.

The document concludes with standard clauses on jurisdiction, general board responsibilities and other provisions It emphasized that the agreement was not a binding agreement for the OCC but an exercise of its supervisory powers. Wells Fargo must submit all required reports and plans to the examiner-in-charge, and any amendments to the agreement must be in writing and approved by the OCC.