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Answer: USAA Bank was fined for failing to correct deficiencies identified by regulators in its management and reporting of suspicious transactions after an extended period of time.
**B is correct.** The bank was fined in March 2022 after admitting that from January 2016 through April 2021, it failed to implement and maintain an anti-money laundering program that met the minimum requirements of the Bank Secrecy Act. Several major deficiencies in the bank's processes were highlighted by regulators over this time period, but they were not addressed by the bank, and the bank's failure to correct these deficiencies resulted in the eventual fine. **A, C and D are incorrect.** These scenarios are not related to this case study. **Learning Objective:** Summarize the regulatory findings and describe the lessons learned from the USAA case study. **Reference:** Global Association of Risk Professionals, Operational Risk and Resilience (New York, NY: Pearson, 2022). Chapter 11 – Case Study: Financial Crime and Fraud
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A risk consultant is meeting with the senior management of a midsize bank to discuss ways in which the bank can improve its management of financial crime and fraud risk. During the meeting, the consultant uses the example of USAA Bank to explain how weaknesses in controls and processes used to manage these risks can result in large losses as well as regulatory fines. Which of the following best explains the fine imposed by regulators on USAA Bank?
A
USAA Bank was fined after many retail bankers were found to have opened unwanted accounts for existing customers in order to meet performance incentives.
B
USAA Bank was fined for failing to correct deficiencies identified by regulators in its management and reporting of suspicious transactions after an extended period of time.
C
USAA Bank was fined after several subsidiaries were found to have laundered over USD 1 billion in funds belonging to large criminal organizations.
D
USAA Bank was fined after fraudulently marketing complex interest rate derivatives to large municipal clients by significantly understating their risk.