Regulators may fault JPMorgan Chase (JPM) for failing to conduct sufficient due diligence into accounts held by the investment firm of disgraced money manager Bernard Madoff, Reuters reported Monday.
The Office of the Comptroller of the Currency is expected to order the nation's biggest bank to close gaps in its anti-money-laundering practices that led to its failing to flag suspect transactions by Madoff's firm, the news service reported, citing a person familiar with the matter.
The action, which reportedly could come later this year, would follow an order in January by the OCC and the Federal Reserve that directed JPMorgan to strengthen compliance with the Bank Secrecy Act and anti-laundering rules.
Jamie Dimon, JPMorgan's chairman and chief executive, told investors recently that the company expects more orders in the coming months. "We need to and will do all the work necessary to complete the needed improvements identified by our regulators," Dimon wrote in an April 10 letter to shareholders.
Neither an OCC spokesperson nor a spokeswoman for JPMorgan responded immediately to a request for comment.
Madoff is currently serving a 150-year prison sentence after pleading guilty in 2009 to running a decades-long Ponzi scheme.
In 2011, the trustee overseeing the liquidation of Madoff's firm sued JPMorgan, charging that Madoff maintained an account at the bank through which he funneled money over the life of his scheme.
A U.S. district judge in Manhattan dismissed most of the lawsuit after concluding the trustee lacked standing to sue the bank on behalf of people who invested with Madoff. Last year the trustee asked the 2nd Circuit U.S. Court of Appeals to reinstate the case.
In November a unit of Bank of New York Mellon (BK) agreed to pay $210 million to settle charges it let clients invest funds with Madoff despite its own concerns that Madoff was running a Ponzi scheme.