U.S. Bancorp expects regulatory order to be lifted by end of year

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U.S. Bancorp predicts that an October 2015 order meant to ensure that it shores up its efforts to combat money laundering will be lifted by the end of the year.

Terry Dolan, the Minneapolis company’s chief financial officer, gave that forecast Tuesday at an industry conference in New York. Analysts who cover U.S. Bancorp have been anticipating a similar timeline, so the announcement was not a surprise, but it was notable as a signpost of the company's progress.

Dolan said Tuesday that the work of upgrading the bank’s defenses against money laundering — hiring new employees, overhauling old processes and upgrading technology — was largely completed by the end of 2017.

Now U.S. Bank has to demonstrate to its regulators that its bolstered efforts are both effective and sustainable, he said.

“We do hope that, and believe that, as we get into the late second quarter, early third quarter, that the regulators will now start to look at that, and make judgments with respect to sustainability,” Dolan said. "Our expectation is that we will get out of the consent order in 2018."

The $462 billion-asset bank signed the consent order with the Office of the Comptroller of the Currency in October 2015. At the time, little was publicly known about what prompted the crackdown.

Then last month, U.S. Bancorp admitted to looking the other way regarding certain suspicious customer accounts. It also acknowledged concealing key information from its regulator.

The company, which was charged with two felony violations, entered into a deferred prosecution agreement and agreed to pay a total of $613 million in penalties. Under the deal, prosecutors will seek to dismiss the charges after two years, assuming the bank follows through on its commitments.

Some of the bank’s misconduct involved longtime customer Scott Tucker, a former payday lending baron who is now serving a prison sentence of more than 16 years.

U.S. Bancorp also admitted to failing to monitor Western Union transactions conducted inside of its branches by individuals who were not customers of the bank.

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