Wells Fargo's share price decreases following the announcement of a regulatory penalty for suspected money laundering activities by the American regulatory body.
The U.S. Office of the Comptroller of the Currency, a significant banking overseer, declared on Thursday that it's imposed disciplinary actions against Wells Fargo due to insufficiencies in their risk management protocols.
The bank's shares plummeted by 5% during midday trading sessions.
The regulator reportedly spotlighted shortcomings in Wells Fargo's financial crimes risk management procedures and internal anti-money laundering controls.
According to the enforcement action, the lender needs to secure approval from the OCC prior to entering into new ventures in medium- or high-risk areas for money laundering or sanctions enforcement. However, the regulator does not intend to impose any monetary penalties.
"We've been dedicating considerable resources to address a significant portion of what's stipulated in the formal agreement, and we remain steadfast in our commitment to complete the work with the same immediacy as our other regulatory obligations," the bank expressed in a statement.
Ever since 2016, Wells Fargo has dishered out billions of dollars to settle various civil and criminal indictments, which involved a long-term strategy that encompassed falsely deploying loan repayments, wrongfully seizing homes, illicitly repossessing autos, erroneously levying fees and interest, and suddenly charging overdraft costs.
In the recent past, the former leader of the bank's retail division was sentenced to three years of supervision, while the bank's former CEO was barred from functioning in the industry.
The disciplinary actions against Wells Fargo by the Office of the Comptroller of the Currency could potentially impact the bank's overall economy and business performance. Despite the lack of monetary penalties, the need for approval before entering new ventures in high-risk areas may hinder the bank's future business expansion.
