American Express Fined $15 Million by OCC for Regulatory Violations

The Office of the Comptroller of the Currency (OCC) has imposed a $15 million civil money penalty on American Express National Bank (American Express) for violations of regulations pertaining to third-party oversight and customer retention efforts targeting small businesses. The OCC's findings revealed significant deficiencies in American Express's governance and oversight of a third-party affiliate, along with non-compliance with Customer Identification Program (CIP) regulations.

The regulatory action against American Express highlights the critical importance of robust third-party risk management and adherence to compliance requirements for financial institutions.

The OCC determined that American Express failed to ensure its third-party affiliate had adequate call monitoring controls and mechanisms for documenting and tracking customer complaints. The lack of proper oversight exposed customers to potential risks, as there were no effective processes in place to address grievances promptly and efficiently.

Third-party relationships can present unique compliance challenges, and financial institutions must diligently assess and manage these relationships to protect both their reputation and customers.

In addition to the third-party oversight issues, the OCC also found that American Express fell short in collecting essential consumer information and maintaining accurate records to demonstrate compliance with CIP regulations. The CIP requires financial institutions to verify the identity of customers to prevent money laundering and terrorist financing activities.

Non-compliance with CIP regulations poses significant risks for financial institutions, undermining their ability to detect and deter illicit financial activities and protect the integrity of the financial system.

By prioritizing compliance and investing in robust risk management practices, financial institutions can strengthen their operational resilience, enhance customer trust, and safeguard their reputation in the financial industry. The OCC's enforcement actions serve as a reminder that regulatory compliance is paramount for maintaining a sound and sustainable financial institution.