TCF Financial Corp. will pay $10 million for lapses in monitoring suspicious bank transactions, including potential terrorist financing.
The fine, announced Friday by the Office of the Comptroller of the Currency, caps a long-running probe of the Wayzata bank's compliance with the Bank Secrecy Act. TCF mishandled mandatory reports regarding questionable dealings, a key tool for law enforcement to prevent money laundering and other illegal activity, federal officials said.
At issue were cash transactions that appeared to be manipulated, and wire transfers where the source and purpose of the funds were unknown, the OCC said.
The Bank Secrecy Act requires financial institutions to make sure illegal money doesn't flow through their organization, and regulators have stepped up enforcement in the past few years.
Last month, British banking giant HSBC agreed to pay $1.9 billion to settle an investigation focused on laundering money from drug traffickers in Mexico and conducting transactions with sanctioned countries, such as Iran and Cuba. More recently, the Federal Reserve hit JPMorgan Chase & Co. with a cease-and-desist order requiring it to beef up compliance.
As for TCF -- the third-largest bank in Minnesota with $19 billion in assets -- regulators said the lender botched its required reports.
Between November 2008 and July 2010, TCF was late filing 2,357 reports of suspicious transactions, according to the consent order from the OCC. The filing goes on to say that in 13 cases, involving about $7.2 million, the bank failed to properly file reports "related to transactions indicative of possible terrorist financing."
The reports to law enforcement were of "poor quality," it said. In some cases the bank didn't check the "terrorist financing" box on reports when the narrative section referenced possible terrorist activity, and in other cases the narrative didn't make clear what sort of suspicious activity had taken place.