By Chelsey Dulaney
State Street Corp. was ordered to revamp its compliance programs
after deficiencies were found related to internal controls,
customer due diligence procedures and transaction monitoring.
State Street had warned last month that it would likely face a
public enforcement action from the Federal Reserve and
Massachusetts Division of Banks.
According to the agreement, the Boston-based bank will be
required to submit written plans detailing how it will strengthen
board oversight of its compliance program, boost its customer due
diligence procedures and ensure compliance with the Bank Secrecy
Act and anti-money-laundering requirements, where deficiencies were
found.
"We are committed to comprehensively addressing the regulators'
concerns and meeting our compliance obligations," State Street said
in a statement. "The deficiencies identified relate to State
Street's internal compliance programs under certain banking
regulations."
The bank will also bring on an independent firm to review
account and transaction data to see if State Street properly
identified and reported suspicious activity.
Some analysts have said they believe the hire of an independent
consultant will mean State Street will have clarity on the
possibility of additional charges soon.
State Street's results have been weighed by higher regulatory
and compliance costs recently.
In April, State Street said it added a $150 million charge to
its legal reserves for resolving outstanding claims related to
foreign-exchange activities.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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