EagleBank agrees to pay more than $9.7 million to resolve Bank Secrecy Act probe

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EagleBank pays $9.7M to resolve probe

Highlights

EagleBank and parent Eagle Bancorp Inc. agree to pay more than $9.7 million—including a $9,057,821.62 fine and $736,515 forfeiture—to resolve Bank Secrecy Act violations.
EagleBank admits it willfully failed to establish an adequate AML/CFT program between 2010 and 2021, enabling a decade-long check kiting scheme.
Senior executives allegedly overrode compliance staff, causing almost $6.3 million in losses to another institution, and EagleBank agrees to remedial AML/CFT upgrades and cooperation.

Settlement terms and admitted compliance failures

As reported by the U.S. Department of Justice, EagleBank and parent Eagle Bancorp Inc. agree to pay more than $9.7 million to resolve an investigation into violations of the Bank Secrecy Act. The bank agrees to a fine of $9,057,821.62 and forfeiture of $736,515, which prosecutors say reflects proceeds from overdraft fees tied to the accounts used in the scheme.

Under the non-prosecution agreement, EagleBank admits that between 2010 and 2021 it willfully fails to establish an anti-money laundering and countering the financing of terrorism, AML/CFT, program in line with the Bank Secrecy Act. The agreement says the bank allowed a father and son to run a check kiting scheme for more than a decade through EagleBank accounts, using checks drawn for amounts above available balances and relying on processing delays between banks.

Financial system impact and remedial measures

Prosecutors say the father involved in the scheme was a friend and business partner of EagleBank's former chairman and CEO, who resigned in 2019. The Justice Department says senior bank executives repeatedly override compliance staff efforts to close the accounts and stop the conduct, while the bank's actions result in almost $6.3 million in losses for another financial institution.

The bank also agrees to strengthen its AML/CFT program, cooperate with the department's investigation and report any violations of federal criminal law. The FBI investigates the case, which is handled by the Criminal Division's Bank Integrity Unit and the U.S. Attorney's Office for the Middle District of Pennsylvania.

In our earlier article on the proposed federal court settlement over alleged manipulation of Urner Barry benchmark egg prices, we described claims that Cal-Maine Foods, Versova and Hickman’s Egg Ranch coordinated bidding and reported trades to inflate daily quotations during a period of sharp price volatility. We also noted that the deal would require limits on competitor communications, the appointment of antitrust compliance officers, and ongoing monitoring and reporting to regulators, alongside large egg donations and cash payments pending court approval.

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