Unlike the earlier cases, the one involving U.S. Bank focused mainly on warning signs that the bank was ignoring.
For about five years, senior bank employees tried to balance their security system’s constant alerts about suspicious customer activity against internal staffing limitations, the authorities said. In a late-2009 memo, court documents show, U.S. Bank’s anti-money-laundering officer warned the chief compliance officer that employees responsible for investigating the alerts were “stretched dangerously thin.”
But senior bank officials knew they should not be curtailing money-laundering inquiries just because they did not have enough employees, so they hid the practice from federal bank examiners, according to prosecutors. One U.S. Bank employee left references to the staffing problem out of the minutes of internal meetings, fearful of what regulators would think, the Justice Department said. Tests of the alert system were halted after they showed that the bank had failed to report suspicious customer activity to regulators.
Dana Ripley, a U.S. Bank spokesman, said that most of the senior employees involved in the practices at issue had left by 2014, when the bank overhauled its anti-money laundering program.
Jeffrey Alberts, a former federal prosecutor who specializes in issues related to white-collar crime and bank regulation, said that scrutinizing potential criminal activity was a challenge for banks. “There’s no level of monitoring you can impose that will catch every single suspicious transaction,” he said.
Mr. Alberts, a partner in the law firm Pryor Cashman, said that banks often struggled to determine how precisely they needed to monitor customer transactions to satisfy regulators. Nonetheless, he said after reviewing the charges, “There are some things that are alleged here that sound clearly wrong.”
For example, prosecutors said the bank had failed to report strange behavior by one longtime customer, Scott Tucker, who was convicted in federal court in October of charges stemming from an illegal payday lending business he operated.
According to the charges announced on Thursday, the bank kept open numerous accounts controlled by Mr. Tucker even after it received a subpoena from regulators for information about him. Mr. Tucker was using corporate accounts whose ownership he misrepresented to pay for millions of dollars spent on personal items like a vacation home in Aspen, Colo., and a Ferrari racing team.
The Justice Department did not identify individual U.S. Bank employees in connection with the case.