By Ryan Tracy
WASHINGTON--The Federal Reserve on Thursday faulted Discover
Financial Services for deficiencies in its anti-money-laundering
program, issuing an enforcement action requiring the bank to step
up compliance.
The Fed action didn't include monetary penalties against the
Riverwoods, Ill.-based firm. Discover's board of directors last
week approved a written agreement with the regulator promising the
lender would improve its monitoring for suspicious transactions and
increase the board's oversight of the matter.
In the written agreement, the Fed cited unspecified
"deficiencies" in Discover's program for detecting suspicious
transactions, as required under the Bank Secrecy Act. It noted that
the company "has a number of separate business lines and legal
entities that must comply with a wide range of applicable laws,
rules, and regulations" and said the problems were "applicable to
various DFS legal entities."
Inspectors at the Fed's Chicago branch identified the problems.
Discover agreed to adopt a number of written plans for improving
its compliance in the coming months.
The action comes as federal regulators are increasing scrutiny
of banks' anti-money-laundering programs as part of a broader
effort to stop illicit activity in the U.S. financial system.
Write to Ryan Tracy at ryan.tracy@wsj.com
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