Wells Fargo released from one enforcement order, still has 10 to go

Wells Fargo has been freed from a five-year-old enforcement action that required the San Francisco bank to improve its controls for combating money laundering.

The termination of the November 2015 consent order represents a step forward for a bank that has been dogged by regulatory problems in recent years. The order was one of 11 public enforcement actions under which Wells was operating.

Bloomberg

“Building the right risk and control infrastructure and remediating our legacy issues remain our top priority, and the termination of this consent order is evidence of our progress,” CEO Charlie Scharf said in a press release Tuesday. “While we are pleased with this action, we have a significant amount of work ahead of us and are continuing to commit the necessary resources to this effort.”

American Banker reported last month that the Office of the Comptroller of the Currency had recently informed Wells Fargo that it was found to have satisfied the requirements of the consent order and was on the verge of being freed from its restrictions.

The 2015 consent order was a response to problems that regulators found in Wells’ wholesale banking unit, which handled corporate customers with annual sales in excess of $5 million. The OCC, which is the $1.9 trillion-asset bank’s primary regulator, determined that Wells Fargo’s processes for determining whether individual customers posed a money laundering risk were ineffective.

The consent order required Wells to collect certain information about the true owners of its corporate customers, in accordance with regulatory guidance on the beneficial ownership of companies, which led to another regulatory headache.

In 2018, Wells disclosed that unnamed federal agencies had opened inquiries into potential misconduct in connection with the bank’s efforts to collect the beneficial ownership information. In a November 2020 securities filing, Wells Fargo stated that it was continuing to respond to various governmental inquiries related to the beneficial ownership data.

Wells still has to complete a lot of work in order to satisfy its regulators. Bloomberg reported last month that some top company executives expect an asset cap imposed by the Federal Reserve in 2018 to remain in place until at least late 2021, while key Fed officials foresee an even longer timeline.