BBT BB and T Corporation

By Katy Burne and Rachel Louise Ensign 

The Federal Reserve said Friday that it had issued a cease-and-desist order to BB&T Corp. over alleged deficiencies in its anti-money-laundering controls, rounding out the latest in a series of actions against the bank for recent failures in such policies.

The cease-and-desist order, which is on the more severe end of the Fed's enforcement scale, means the bank must show it is complying with anti-money-laundering rules until the central bank removes or otherwise modifies the order.

The Fed's action, which came with the firm's consent, followed another supervisory action issued to BB&T, based in Winston-Salem, N.C., last year by the Federal Deposit Insurance Corp. and North Carolina Commissioner of Banks. That order also came with the bank's consent. BB&T, which had $219.3 billion in assets as of Dec. 31, disclosed the likely consent order with the Fed in a December securities filing.

Brian Davis, a BB&T spokesman, said the firm has a "long history of quickly addressing regulatory concerns," and has already made "significant enhancements" to its anti-money laundering compliance program. He said the firm is "committed to working alongside our regulatory partners to implement the needed improvements as quickly as possible."

Such orders don't state that the bank has laundered money, but rather that their internal systems for detecting criminal activity and reporting it to the government are deemed unsound by regulators. The policing of such violations has become more severe since the financial crisis.

The Fed's order, taken Wednesday with mutual agreement by the North Carolina Commissioner of Banks, follows a recent inspection by the Federal Reserve Bank of Richmond, which said it had identified gaps in BB&T's anti-money-laundering controls.

It requires BB&T to adopt measures to reassure the Fed and other regulators that it is taking corrective steps. These steps include submitting written plans within 60 days to ensure enhanced oversight of the controls by the firm's board of directors, and progress reports at the end of each quarter.

The Fed's order said BB&T had to adopt "a firm-wide compliance risk management program designed to ensure compliance with all applicable laws, rules and regulations relating to anti-money laundering, including compliance with the Bank Secrecy Act."

The bank has been one of the few acquisitive large banks, and the consent order likely halts its mergers-and-acquisitions appetite. Banks generally can't acquire other lenders when they are under such an order, though Chief Executive Kelly King said on BB&T's recent earnings call that the bank could still do nonbank deals like buying firms in the insurance industry.

A number of other regional banks are also under consent orders. The orders themselves, and the elevated costs for compliance systems and personnel to deal with them, often drag on longer than banks expect.

Write to Katy Burne at katy.burne@wsj.com and Rachel Louise Ensign at rachel.ensign@wsj.com

(END) Dow Jones Newswires

January 27, 2017 13:49 ET (18:49 GMT)

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