Zelle is now facing a lawsuit from BofA amidst its latest investigation from a Consumer Financial Protection Bureau inquiry related to the bank’s processing of electronic payments.
Bank of America has disclosed that it is addressing an inquiry from the Consumer Financial Protection Bureau (CFPB) regarding its processing of electronic payments through Zelle.
This information was revealed in the bank’s quarterly filing with the Securities and Exchange Commission.
The CFPB is seeking to resolve the inquiry or potentially file an enforcement action, and the bank is currently assessing its next steps, which may include litigation.
Based in Charlotte, North Carolina, Bank of America is also in communication with several federal regulators concerning its compliance programs related to the Bank Secrecy Act, anti-money laundering (AML), and sanctions.
The bank noted that it has been implementing enhancements to its AML and sanctions compliance programs while cooperating with regulatory authorities.
The filing indicated that ongoing discussions with regulators might lead to one or more public orders, although the bank does not anticipate these issues will have a materially adverse financial impact.
A spokesperson for Bank of America declined to comment further on the disclosures, per several news reports.
This situation follows similar inquiries faced by Wells Fargo and JPMorgan Chase earlier this year, which specifically addressed customer disputes related to transactions on the Zelle network.
However, Bank of America did not mention any disputes in its announcement.
JPMorgan, in its second-quarter filing, indicated that it is also considering litigation in response to the CFPB’s inquiry.
The issue of responsibility for scams or fraud involving bank customers has sparked significant debate.
In August, Democratic lawmakers introduced legislation aimed at broadening consumer protections under the Electronic Fund Transfer Act.
JPMorgan CEO Jamie Dimon recently remarked on the challenges of holding banks accountable for every payment knowingly sent, describing the potential moral hazard as “extraordinary.”
Zelle, which is managed by Early Warning Services in Scottsdale, Arizona, is owned by a consortium of banks including JPMorgan, Wells Fargo, Bank of America, and others.
Neither Zelle nor the CFPB have responded to requests for comment.
Regarding AML compliance, Piper Sandler analyst Scott Siefers noted a recent enforcement action against Wells Fargo by the Office of the Comptroller of the Currency (OCC) over similar issues.
Siefers expressed hope that Bank of America might navigate its situation similarly to Wells Fargo, achieving a resolution without financial penalties.
The OCC reported deficiencies in several areas of Wells Fargo’s controls, including suspicious activity reporting and customer due diligence.
The formal agreement with Wells did not impose a fine but required improvements in internal controls and accountability related to AML and sanctions.
Given these developments, analysts are now considering whether other banks might face increased regulatory scrutiny.
In Bank of America’s second-quarter filing, the bank added concerns about the adequacy of its AML and economic sanctions program to its list of uncertainties and risks.
Siefers suggested that the disclosures from multiple large banks might indicate a broader regulatory focus on these issues rather than specific deficiencies within individual banks.
Follow U.S. Bank News for more updates.
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