JPMorgan Chase Bank is paying $88.3 million in an agreement with the Treasury Department, which says the bank violated regulations that prohibit lending money for entities linked to countries engaged in illicit nuclear trade and that cover dealings with Cuba and Sudan.
Treasury's Office of Foreign Assets Control announced the agreement Thursday with the big Wall Street bank. The office said some of JPMorgan Chase's "apparent violations" of the regulations were serious.
It was the largest penalty paid in a settlement by a U.S. bank in OFAC's 60-year history, Treasury said. Even so, OFAC said it had reduced the potential penalty against the bank because of its "substantial cooperation" with the agency's investigation.
In one case JPMorgan Chase Bank in December 2009 made a $2.9 million trade loan to another bank, which extended credit to a ship that had been identified as linked to the Iranian government's shipping lines, OFAC said. It said JPMorgan managers knew the loan violated the regulations against helping nations such as Iran that proliferate weapons of mass destruction but didn't notify the government until March 2010.
In the Cuban case, OFAC said the bank processed 1,711 wire transfers totaling $178.5 million between December 2005 and March 2006 involving Cubans, in an apparent violation of the U.S. Cuban assets control regulations. Although JPMorgan managers were given the results of an internal investigation of the transfers, the bank "failed to take adequate steps to prevent further transfers," the agency said.
Jennifer Zuccarelli, a spokeswoman for New York-based J.P. Morgan Chase & Co., said the incidents cited by the government were rare and unrelated to each other.
"The civil settlement resolves a number of OFAC allegations dating back to 2005, none of which involved any intent to violate OFAC regulations." Zuccarelli said. "The firm screens hundreds of millions of transaction and customer records per day, and annual error rates are a tiny fraction of a percent. We are pleased to have resolved these matters and to move forward with enhancements to our global OFAC compliance program."
OFAC said the rules involved were the Cuban Assets Control Regulations, the Weapons of Mass Destruction Proliferators Sanctions Regulations, the Global Terrorism Sanctions Regulations, the Iranian Transactions Regulations, the Sudanese Sanctions Regulations and the Former Liberian Regime of Charles Taylor Sanctions Regulations.