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American Express fined over lax financial control

American Express Co, the third-largest US credit-card network, agreed to pay US$65 million to settle US charges that two of its units failed to set up adequate safeguards against money laundering.

American Express Bank International of Miami and American Express Travel Related Services Co of Salt Lake City were cited for violating a federal law designed to thwart financial crimes, according to a statement released in Washington yesterday by the Federal Reserve and the Treasury Department's Financial Crimes Enforcement Network, known as FinCen.

The action "underscores the necessity for banking institutions to have anti-money-laundering controls in place that are commensurate with the level of risk associated with their operations," Roger Cole, director of banking supervision and regulation at the Fed, said in the statement.

American Express Bank International also entered into a deferred prosecution agreement with the justice department that would allow it to escape criminal penalties in a year if it implements new anti-money-laundering measures.

The heightened federal scrutiny of programs to fight money laundering among US lenders is part of an effort to cut off sources of potential funding for terrorists since the Sept. 11, 2001, attacks.

The American Express units agreed to the penalty by the Fed and FinCen and to take corrective action.

"We have cooperated fully with the government and understand the need for absolute vigilance in our efforts to protect against money laundering," Susan Atran, a spokeswoman for New York-based American Express, said in a statement. "We have already made substantial efforts to augment and strengthen our compliance programs and will continue to do so."

FinCen determined that American Express Bank International, which offers traditional private banking services, failed to conduct adequate independent testing and to designate staff to ensure compliance.

The unit operated in certain high-risk business lines without the proper systems for promptly detecting and reporting money laundering and other suspicious activity.

The agency also found that the other unit, American Express Travel Related Services, failed to file ``a significant number'' of suspicious activity reports.
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