Wells Fargo under federal investigation for potential fraud in wholesale banking unit

September 7, 2018

Wells Fargo & Co. (NYSE: WFC) is facing another federal investigation — this time related to claims of wholesale banking employees who altered and/or added information to documents without customers' knowledge, according to a report from The Wall Street Journal.

 

News of the U.S. Department of Justice investigation follows allegations of fraudulent practices made against the bank earlier this year. Investigators are looking into whether the employees' behavior was a direct result of management pressure, according to the WSJ, which cites people familiar with the matter.

 

Some of the altered and/or added information included Social Security numbers, addresses and dates of birth of those associated with clients.

A spokesperson for the Justice Department, in response to a request from the Business Journal, declined to confirm or deny existence of an investigation.

 

The incidents in question happened from 2017-18, as employees were working to meet a June 30 deadline in compliance with a November 2015 consent order from the Office of the Comptroller of the Currency to address anti-money-laundering controls. The consent order, which stemmed from issues within Wells Fargo's South Dakota operations, required verification of more than 100,000 customer accounts.

 

Previous reports detailed how employees were having trouble meeting the June 30 deadline, and Wells Fargo asked for an extension in early May.

 

"This particular situation involved a new process and a new required document called Certification of Beneficial Owners that our team members have to complete to help ensure we know our customers. We’ve recognized that in certain circumstances additional training and new procedures were needed and have now been applied," Wells Fargo says. "Even though this matter has not negatively impacted our customers, we take all issues relative to documentation seriously. If we get something wrong, we fix it."

 

This isn't Wells Fargo's first run-in with the federal government. Since 2016, the bank has been embroiled in conflicts stemming from millions of fake retail-banking accounts uncovered, having been created without customers' knowledge to meet strict sales quotas. Reports also surfaced of problems within wealth management.

 

Earlier this year, the U.S. Department of Labor began looking into a potential violation in the bank's handling of retirement accounts. Around the same time, the bank also agreed to pay $1 billion in penalties as part of a consent order from the OCC and the Consumer Financial Protection Bureau, leveraged in response to fraudulent auto-loan practices.

 

Most recently, Wells Fargo agreed to pay $2.09 billion in civil penalties to redress misconduct uncovered in its mortgage-related activities leading up to the financial crisis. That particular investigation was unrelated to the bank's recent woes and mirrored similar probes involving multiple large financial institutions.

 

via Business Journals

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