TCF Fined $10M for Lapses in Reporting Suspicious Activity

TCF Fined $10M for Lapses in Reporting Suspicious Activity

Regulators said the bank failed to properly report transactions that might have been linked to terrorist activities.

Wayzata-based TCF Financial Corporation will pay a $10 million fine to settle an investigation into the company’s alleged failure to properly document and report suspicious bank transactions.
The settlement follows a probe by the Office of the Comptroller of the Currency (OCC), a regulatory agency within the U.S. Department of the Treasury, into TCF’s alleged failure to fully comply with the Bank Secrecy Act (BSA), which requires financial institutions to report suspicious activity that might signify money laundering, terrorist financing, and other criminal activities.
According to documents released Friday by the OCC, between November 2008 and July 2010, TCF was late in filing with federal authorities 2,357 reports of transactions that the bank identified as suspicious. In 13 of those reports, which involved transactions collectively worth about $7.2 million, TCF failed to follow the proper procedures to indicate that it had suspected that the transactions could be linked to terrorist financing, the OCC alleged.
The reports were “not adequate and of poor quality,” the OCC said. “[And] in some cases, [they] did not clearly communicate the nature of the suspicious activity that was identified by the bank.”
Federal regulators in 2010 launched an investigation into TCF’s suspicious activity reports after a routine examination indicated that there might be lapses in those reports.
TCF spokesman Jason Korstange on Monday acknowledged that there used to be shortcomings in the company’s reporting procedures, but it has in the past two years “devoted considerable effort and resources” to make improvements, which include providing employee training and installing a new software to flag suspicious transactions.
“[We] are confident that with the help of the OCC, we have taken the necessary steps to put in place a best-in-class BSA program and team to lead this critical area moving forward,” William Cooper, TCF chairman and CEO, said in a statement.
In addition to paying the fine, TCF has agreed to re-file the 13 reports and adopt further measures that will be aimed at improving its suspicious-activity reporting procedures.
The settlement comes about a month after about a dozen Iranian students at the University of Minnesota received letters from TCF, in which the bank warned the students that their accounts might soon be closed. Korstange told the Star Tribune that the letters were linked to investigations into transactions that might have violated federal sanctions but declined to disclose to the newspaper how the transactions violated such sanctions. The bank is reportedly still working through that matter, and so far, it has not closed any Iranian student accounts unless they were dormant.
TCF is the second-largest bank holding company in Minnesota based on assets, which totaled $17.9 billion as of June 30.