A bank has been fined more than $500 million by the US Securities and Exchange Commission (SEC) after admitting to a scheme that allowed investors to withdraw large sums of money from their accounts in violation of anti-money laundering rules.
The New York-based BNY Mellon, which has a market value of more than US$20 billion, admitted that it was in a position to make billions of dollars of improper withdrawals from customers’ accounts, according to SEC documents seen by the Wall Street Journal.
It was the first time the US regulator had formally fined a bank, the SEC said.
The SEC said in a statement it was “not aware of any other bank in the United States that has been subject to such a serious and widespread scheme”.
It also said it would take enforcement action against any of the banks, although it did not name any banks.
The regulator said it believed the scheme was designed to deceive customers, who were misled by BNY’s promise of a high return on their money invested in BNYM.
“By failing to disclose the fraudulent transactions that led to these fraudulent profits, BNY failed to provide its customers with meaningful, timely and accurate information about the underlying risks of the underlying investments,” the statement said.
In addition to the $500m fine, the regulator said BNY will pay $25 million to settle civil fraud claims related to the scheme, and it will also investigate other potential civil charges.
The bank was fined $250 million in May 2018 after admitting it was aware of the scheme in February 2019.
In a statement, the bank said it “will take the necessary actions” to rectify the matter.
“The bank continues to believe in the integrity of our financial products and services and remains committed to improving our processes and the way we manage risk,” it said.