JPMorgan Chase & Co. (NYSE:JPM)’s fashion of monitoring suspect transactions is currently under the crosshairs of a U.S regulatory board. The regulatory board, which provides oversight to U.S banks’ anti-money laundering systems, will focus on possible lapses in JPMorgan Chase & Co. (NYSE:JPM)’s system; particularly the way the bank handles suspect transactions.
Well placed sources shed light on the news, citing that the probes were particularly aimed at understanding the system and personnel the bank employs to curb illegal money flows. The sources, who opted to remain anonymous, further revealed that one key angle of the probe was establishing how JP Morgan’s systems were designed to review large numbers of suspect transactions.
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In the event that this probe unveils lapses and pitfalls in JP Morgan’s system, things could head south. In addition to adding to the pile of current problems, negative revelations make the bank vulnerable to the U.S Office of the Controller of Currency. The OCC could hit JP Morgan with a regulatory order.
The OCC probe is driven by the fact that regulators and banks occasionally disagree about the effectiveness of suspicious activity reports. Typically, suspicious activity reports are filed by banks and are designed to point towards financing linked to terrorism, sanctioned countries, and illegal narcotics.
More holes in the sinking boat
The OCC probe could shoot more holes into the already sinking boat. The probe- alongside other inquiries from regulators like the U.S Justice Department- could create an even bigger list of transactions that aided the inflow and outflow of illicit funds.
The probe also paints a dark picture for JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon. This year alone, an embattled Dimon has had to face the heat of losing $5.8 billion in the controversial ‘London Whale’ trade losses. Likewise, the erroneous trading that led to the $5.8 billion loss is also under investigation. As such, Dimon has a series of probes to attend to, something that immensely weighs in on him and the bank at large
As if to aggravate the situation, sources familiar with the probe noted that the OCC examiner tasked with overseeing JPMorgan, was known to take a pragmatic and aggressive approach towards unearthing money laundering at leading banks.
Jamie Dimon is in need of a real strategy. He needs to pull the bank out of a familiar gutter that is quickly becoming a home. Already, the bank has resolved to a more quiet PR in light of the mounting controversy. Speculation is rife, and analysts are eager to see how the bank’s current situation will shape out.
JPMorgan Chase & Co. (NYSE:JPM)’sprobe is not an isolated incident. Earlier on in the year, the OCC had identified loopholes in Citigroup Inc. (NYSE:C)’s fashion of processing deposits from banks outside the U.S. Citigroup later on confirmed in April, that it had addressed the problems pinpointed by the OCC.