Wells Fargo must pay a $98 million fine for compliance violation
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Wells Fargo & Co is finally going to resolve an old and lengthy case by paying a $97.8 million fine for inadequate oversight of its compliance risks. Due to its poor practices, the company ended up violating US sanctions against Iran, Sudan, and Syria, according to federal authorities.
Because of it, the company has found itself in conflict with the Federal Reserve and the US Treasury Department’s Office of Foreign Assets Control (OFAC). The two have said that the bank’s oversight led to it violating the US sanctions by providing a trade finance platform to a foreign bank. Not only that but the platform was used to process $532 million, all of it in prohibited transactions.
Wells Fargo must pay a $97.8 million fine
As a consequence of the bank’s negligence, the Fed has issued a fine of $67.8 million. Meanwhile, OFAC has fined the bank another $30 million for inadequate oversight of its compliance risks.
The violation itself took place between 2010 and 2015. Wells Fargo addressed the issue through a spokesperson, who said that the bank is pleased to finally resolve this legacy matter. The conduct ended in 2015, and upon realizing its error, the bank voluntarily self-reported. The spokesperson further added that Wells Fargo had fully cooperated with the Federal Reserve Board and OFAC ever since in order to find an adequate solution and establish the proper practices, so such issues would not happen again.
In its own release, OFAC addressed the new development, and it noted that Wells Fargo, as well as Wachovia Bank, which is Wells Fargo’s predecessor, have provided a European bank with software back in 2008. This software allowed the bank to process 124 transactions that involved sanctioned jurisdictions or individuals.
Wells Fargo was previously fined by the CFPB
Back in December 2022, the US Consumer Financial Protection Bureau also fined Wells Fargo due to mismanagement of car loans, mortgages, and bank accounts. At the time, the watchdog issued its largest-ever civil penalty. This was a part of the $3.7 billion agreement to settle charges for mentioned violations.
CFPB Director Rohit Chopra stated at the time that Wells Fargo was a corporate recidivist, which placed one-third of US households at risk of harm. The watchdog, therefore, became concerned that the bank’s growth initiatives, product launches, and other methods of increasing profit have delayed a necessary reform.
Furthermore, he added that the regulators should think about applying limitations on the bank, other than the $1.95 trillion asset cap that the Fed already imposed back in 2018. When the Fed capped the bank, its Chair Jerome Powell said that the cap will stay until the bank resolves its problems.