BNA's Banking Report: Enforcement 2013: Enforcement Actions Continue Three-Year Decline; DOJ Emerges as Major Player

Overall Trends & Outlook -

From an enforcement standpoint, 2013 was another historic year in a number of important ways beyond the sheer number of cases, which were again significant. Federal banking agencies1 issued 701 formal enforcement actions, representing more than a fifty percent reduction in enforcement actions since the high water mark in 2010. Nevertheless, relative to more normal periods, such as 2004 to 2008, this still suggests a bumper crop of enforcement actions. While the relative decrease in recent enforcement activity reflects the banking industry’s recovery from the financial crisis, regulators imposed record financial penalties in 2013. This is an ominous trend for financial institutions.

Other notable trends in 2013 are the continued emergence of the Department of Justice (‘‘DOJ’’) as a de facto banking regulator, a heightened focus on risk management, the development of requirements that compel banks to know their customers and their customers’ customers, and a continuing ramp up of enforcement activity by the CFPB. Regulators continue to focus on Bank Secrecy Act violations, and the FRB is increasingly relying on its ‘‘source of strength’’ doctrine. Finally, as we predicted in our enforcement survey of 2012,4 there is continuing pressure on regulators to hold individuals accountable.

Originally published in BNA’s Banking Report, 102 BBR 947, 5/20/14, 05/20/2014.

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