US regulators plan to fault JPMorgan Chase, which served as Bernie Madoff’s main bank for two decades, for failing to conduct adequate due diligence and report suspicious activity, according to a person familiar with the matter.
The Office of the Comptroller of the Currency is expected to issue a cease-and-desist order against JPMorgan, which will require the largest US bank to put an end to the alleged failures in its anti-money laundering practices.
The timing of the order is uncertain but could come later this year, the source said. A fine is not expected. If the OCC is not satisfied with JPMorgan’s response, it can take harsher action against the bank, including financial penalties.
OCC spokesman Bryan Hubbard declined comment, as did JPMorgan spokeswoman Jennifer Zuccarelli.
Madoff was arrested in December 2008, pleaded guilty in 2009 to running a massive, decades-long Ponzi scheme, and is serving a 150-year prison sentence.
JPMorgan has said there was no evidence showing that anyone at the bank knew of Madoff’s scheme.
The OCC will fault JPMorgan for treating Madoff and his related entities as low-risk customers, and find that the bank failed to heed red flags, said the source, who was not authorized to speak publicly about the matter.