|A JPMorgan Chase & Co. subsidiary is facing a potential regulatory fine over poor internal risk controls. The potential fine was related to issues with “internal controls and internal audit over certain advisory and other activities.”|
The subsidiary facing the fine is primarily regulated by the Office of the Comptroller of the Currency. In recent years, The OCC has focused on internal-control weaknesses at banks and has taken them to task for the length of time they take to fix the weaknesses.
Last month, Citigroup was ordered by the Federal Reserve and the OCC to revamp its risk-management processes, the systems inside a bank designed to detect problematic transactions, risky trades, and anything else that could harm the bank. The order included a $400 million fine from OCC. Dealing with the order is expected to be a costly and long process for Citigroup.
The OCC also fined USAA Federal Savings Bank $85 million last month for allegedly failing to maintain effective compliance-risk-management and information-technology risk-governance programs. This trend of regulatory fines is likely to continue and to avoid these costs, organizations must take steps to improve their processes and manage risk.