By PAUL O’DONOGHUE, Senior Correspondent
GERMANY’S financial watchdog BaFin has imposed a record €45 million ($52.5 million) fine on Frankfurt-based JPMorgan SE for deficiencies in money-laundering prevention.
The company violated its supervisory duty in internal processes for submitting reports of suspected money laundering, BaFin added.
“Due to these process weaknesses, J.P. Morgan SE systematically failed to submit reports of suspected money laundering in a timely manner between October 4, 2021, and September 30, 2022,” it said.
The penalty is the largest BaFin has ever handed out to a bank. It comes as the watchdog has taken a tougher stance on compliance breaches.
JPMorgan is Wall Street’s biggest bank, with an $850 billion valuation. It has also grown to one of the largest lenders in Germany, drawn to its large wealthy customer base, stable regulatory environment and fintech scene.
The size of the fine reflects JPMorgan’s weight as a banking giant.
“The fine relates to historical findings. The timing of our SAR filings did not impede any investigations by the authorities,” JPMorgan said in a statement.
“We are deeply committed to detecting, preventing, and reporting money laundering and financial crimes,” the bank added.
Banks must file suspicious activity reports, or SARs, with authorities when they detect activity that could involve a crime.
The U.S. bank recently announced it will launch its Chase digital retail bank in Germany in the second quarter of next year. Analysts consider the plan to be a bold move into the crowded market.
BaFin decision on JPMorgan Germany
In its decision, BaFin, Germany’s FIU, said JPMorgan “breached its supervisory duties regarding internal processes for submitting suspicious activity reports”.
“Credit institutions must report to the FIU if they suspect that a transaction may be related to money laundering or terrorist financing,” it said.
“These suspicious activity reports must be submitted immediately. This allows the FIU to quickly initiate further steps, if necessary. Such as forwarding the information to law enforcement agencies.”
BaFin said that, in cases of “systematic violations”, the fine can be based “on the total turnover of the credit institution”.
“This can lead to very high fines, as in this case,” it said.
We hope you enjoyed reading this article
If you would like unlimited access to AML Intelligence premium articles, newsletter delivered twice a week, access to our Global Bank Fines and Penalties database, free access to Boardroom Series events and much more, select one of our subscription options and become a subscriber!
View subscription optionsIf you have an account, log in