Capital One Fined $390M For Violating Bank Secrecy Act

Capital One has received a $390 million penalty from the Financial Crimes Enforcement Network (FinCEN) for engaging in both “willful and negligent violations of the Bank Secrecy Act (BSA) and its implementing regulations.”

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Capital One (COF) admitted that it had deliberately failed to implement and maintain an effective Anti-Money Laundering program, with it also not reporting thousands of suspicious currency transactions.

The violations are believed to have occurred from at least 2008 through 2014, and relate to Capital One’s Check Cashing Group.

Capital One also acknowledged that it failed to report suspicious transactions by convicted money launderer, Domenick Pucillo, an associate of the Genovese organized crime family.

Despite being informed about Pucillo’s association with criminal activity in 2013, Capital One continued to process over 20,000 transactions valued at approximately $160 million.

FinCEN’s Director, Kenneth Blanco, called the violations “egregious,” adding that Capital One’s behavior “puts our nation and our people at risk” by depriving law enforcement of this information. (See COF stock analysis on TipRanks)

RBC Capital analyst Jon Arfstrom reiterated his Hold rating on COF three days ago and set a price target of $120. (7% upside potential).

Capital One will report earnings on January 26 and Arfstrom expects first quarter earnings per share (EPS) to come in at around $5.07.

Consensus among analysts is a Strong Buy based on 12 Buys and 2 Holds. The average price target of $115.31 suggests that COF shares are almost fully priced, with minimal upside potential of around 2% over the next 12 months.

COF scores a 9 out of 10 on Tipranks’ Smart Score rating, indicating that it has a strong chance of beating market expectations.