U.S. Bancorp: Relationship With Scott Tucker Under Investigation

U.S. Bancorp disclosed in a securities filing Friday that it is the subject of an investigation into its relationship with indicted race-car driver Scott Tucker.

The bank said the Manhattan U.S. attorney's office is investigating its relationship with Mr. Tucker and has asked for information on aspects of the lender's anti-money-laundering controls, which are supposed to spot and prevent nefarious account activity.

While U.S. Bank had previously disclosed it was cooperating with an investigation of Mr. Tucker, it hadn't mentioned the scrutiny of its own internal controls.

In February, Mr. Tucker, a businessman-turned-race-car driver, and his lawyer were charged with overcharging customers hundreds of millions of dollars in undisclosed fees in one of the largest federal criminal payday-lending cases ever. Mr. Tucker had bank accounts with U.S. Bank, the Minneapolis lender has said.

The disclosure adds to anti-money-laundering issues at U.S. Bank. In October, it entered into a consent order with the Office of the Comptroller of the Currency over issues with its controls.

Under anti-money-laundering laws, banks can be penalized for failing to spot suspicious activity running through customer accounts. The size of such penalties have increased dramatically in recent years.

For instance, in 2014, J.P. Morgan Chase & Co. paid a $1.7 billion penalty for failing to file a certain kind of anti-money-laundering report to U.S. authorities on Bernard Madoff, who was convicted of orchestrating an infamous Ponzi scheme. Meanwhile, HSBC Holdings PLC in 2012 agreed to pay a $1.9 billion penalty to settle allegations that included inadequate anti-money-laundering controls.

In its recent disclosure, U.S. Bank didn't specify the size of any potential penalty. The bank added $110 million to legal and regulatory reserves in the second quarter, but didn't link this to any specific cases.

Write to Rachel Louise Ensign at [e-mail]

(END) Dow Jones Newswires

August 05, 2016 15:55 ET (19:55 GMT)

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