The Treasury Department’s Office of the Comptroller of the Currency (OCC) levied a $65 million civil penalty against Los Angeles-based City National Bank over alleged risk management and internal control failures.

City National failed to comply with heightened standards for certain large insured national banks and violated the Bank Secrecy Act (BSA), the OCC said in a press release Wednesday.

As part of the settlement, the bank agreed to a cease-and-desist order requiring broad and comprehensive corrective actions to improve its strategic plan, operational risk management, internal controls, and compliance risk management. The OCC’s consent order requires the bank’s board appoint a compliance committee.

The details: The OCC determined the bank had been in noncompliance with its heightened standards since December 2020, which constituted unsafe or unsound practices, according to the consent order.

Further, the OCC found the bank’s compliance risk management to have specific deficiencies involving BSA/anti-money laundering (AML), fair lending, strategic risk management, and investment management practices.

Compliance considerations: In June, the bank entered into an agreement to comply with the Gramm-Leach-Bliley Act.

According to the agreement, the bank must appoint a deputy comptroller to review any potential acquisitions of financial subsidiaries.

Further, the bank must appoint a three-member compliance committee, with the majority not being employees or officers of the bank, per the consent order.

The bank must correct deficiencies in third-party risk management, enterprise change management, internal controls testing, regulatory issues management, operational risk event reporting, fraud risk management, payments systems operations, and BSA/AML compliance.

Bank response: “City National, and our new executive management team, are committed to resolving the matters identified in the OCC’s order as quickly as possible,” a spokesperson for the bank said in an emailed statement. “Our focus will continue to be on both strengthening our infrastructure and systems to reflect a bank of our size and business model while at the same time providing our clients with consistently outstanding banking products and services.”

The bank agreed to the consent order without admitting or denying its findings.

Jeff Dale is Managing Editor, Editorial Projects and Analytics, at Compliance Week. He previously served as Compliance Week's Digital Editor and has worked as a copy editor at the Boston Herald and city editor at The Hour Publishing Co. in Norwalk, Conn.View full Profile

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