EagleBank Pays $9.7M for Failing BSA/AML Compliance Over a Decade
EagleBank agrees to a $9.7 million settlement for violating BSA/AML regulations.
Why it matters: Financial institutions face heightened enforcement risks under BSA/AML laws. Legal counsel advising banks must prioritize compliance to avoid costly penalties and reputational damage.
- EagleBank will pay over $9.7 million, including $9.1 million in civil penalties and $700,000 forfeited from overdraft fees.
- The bank knowingly allowed a check kiting scheme from 2010 to 2021 causing nearly $6.3 million in losses to another financial institution.
- Senior EagleBank executives overrode compliance efforts aiming to stop the fraud.
- The bank admitted willful failure to maintain an adequate AML program under the BSA.
EagleBank, headquartered in Bethesda, Maryland, has agreed to pay more than $9.7 million to resolve federal allegations of Bank Secrecy Act (BSA) violations related to anti-money laundering (AML) compliance failures. The settlement comprises approximately $9.1 million in civil penalties and forfeiture of over $700,000, representing proceeds obtained through overdraft fees linked to a persistent check kiting scheme.
According to the Department of Justice announcement, EagleBank knowingly allowed favored customers to engage in fraudulent check kiting from 2010 through 2021. This scheme inflicted nearly $6.3 million in losses on another financial institution. Despite repeated warnings from compliance personnel, senior executives at EagleBank overrode efforts to halt the illicit activity.
U.S. Attorney Brian D. Miller emphasized the unacceptable nature of such conduct, stating, "It is simply unacceptable for financial institutions to permit fraud under their noses." Assistant Attorney General A. Kristen Clarke highlighted that the failures spanned more than a decade and involved deliberate disregard of compliance protocols.
The bank admitted to willfully failing to maintain an adequate AML program as mandated by the BSA. The resolution underscores the Department of Justice's ongoing commitment to vigorous enforcement of anti-money laundering laws.
Legal advisors to financial institutions should view this case as a reminder to enforce robust AML controls and ensure that compliance officers can exercise their duties without interference. The settlement serves as a cautionary tale against internal overrides that disregard regulatory obligations.
By the numbers:
- $9.7 million — total settlement paid by EagleBank
- $6.3 million — losses caused by the check kiting scheme
- 2010-2021 — period over which violations occurred