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Feds slap Zions over billions in illegal money transfers
This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Two federal agencies have slapped Zions Bank with multimillion-dollar civil penalties for failing to monitor suspicious wire transfers of billions of dollars related to transactions that may have involved drug trafficking and other crimes.

The Office of the Comptroller of the Currency on Friday said it imposed an $8 million penalty against Zions for shortcomings in its anti-money laundering controls — violations of the Bank Secrecy Act and the USA Patriot Act.

The Financial Crimes Enforcement Network — a Treasury Department agency involved in fighting money laundering — also fined Salt Lake City-based Zions $8 million but said the government would be satisfied by a single payment of $8 million.

"The bank is supposed to file suspicious activity reports if they find suspicious activity, and the bank failed to file those on a timely basis," OCC spokesman Dick DeBuck said.

"The regulations also require the bank to monitor this wire activity, and the bank did not do that, either."

Zions did not admit or deny the allegations spelled out in separate documents issued by the OCC and the Financial Crimes Network.

In a statement, CEO Scott Anderson said the bank takes "very seriously our obligations to comply with federal laws and regulations, including the Bank Secrecy Act."

Anderson said Zions has closed down the business unit handling the money transfers and has been cooperating fully with regulators.

"Over the past three years, we have employed considerable resources bankwide to significantly enhance our systems designed to detect and report potentially suspicious activities," Anderson said in the statement.

The OCC said Zions had developed a "remote deposit capture product" that allowed customers to deposit imaged financial documents such as checks into accounts in Mexico and other countries from "remote" locations, ostensibly in the United States.

The product was marketed to "high-risk customers" in 2006 and 2007 "without sufficient regard to (Bank Secrecy and Patriot Act) compliance implications," the OCC said.

The Financial Crimes Network said Zions failed to report 132 cases of suspicious activity that represented more than $12.3 billion.

"These suspicious activities involved, among other things, sequentially numbered travelers checks, possible black market peso exchange, transactions involving entities and accounts alleged to have been involved in drug trafficking activities and unusual wire transfers," the Financial Crimes Network said in a document released Thursday.

The agency said Zions processed money transfers that indicated patterns commonly associated with money-laundering, such as the nature of the business, originators and beneficiaries in "high-risk" locations and lacked any apparent business or legal purpose.

DeBuck said the OCC discovered the violations during examinations of the bank. But an OCC statement said the bank later conducted a voluntary assessment of its "foreign correspondent business" after shutting down the unit. Zions then reported suspicious activity to the agency.

According to the Financial Crimes Network, Zions filed 20 reports of suspicious activity after the review. The transactions involved in the activity totaled $11.5 billion, according to the network.

"With these actions, we are sending another strong message that banks need to be vigilant and ensure that they have effective anti-money laundering programs in place," John Walsh, the OCC's acting director, said.

pbeebe@sltrib.com

Banking • Agencies seeking $8M say shady activity wasn't tracked.
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