Explanation:

In early 2022, USAA Federal Savings Bank was fined $140 million by the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC) for willfully failing to implement and maintain an anti-money laundering (AML) program that met the requirements of the Bank Secrecy Act (BSA), and for failing to accurately and timely report thousands of suspicious transactions to FinCEN despite repeated warnings by regulators over several years. Option A refers to the Wells Fargo cross-selling scandal. Option C resembles the HSBC or Wachovia money laundering scandals. Option D loosely describes the Bankers Trust cases with Procter & Gamble/Gibson Greetings.

Question 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?

USAA Bank was fined after many retail bankers were found to have opened unwanted accounts for existing customers in order to meet performance incentives.

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.

USAA Bank was fined after several subsidiaries were found to have laundered over USD 1 billion in funds belonging to large criminal organizations.

USAA Bank was fined after fraudulently marketing complex interest rate derivatives to large municipal clients by significantly understating their risk.

Financial Risk Manager Part 2

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