The Justice Department signed a nonprosecution agreement with EagleBank on Tuesday, resolving a criminal investigation into willful violations of the Bank Secrecy Act. The bank will pay $9,057,821.62 in fines plus a forfeiture of $736,515, the latter tied directly to overdraft fees it collected on the accounts at issue.
The underlying conduct: a father-son duo, friends of then-CEO Ronald Paul, ran a check kiting scheme first flagged in 2008. Compliance staff filed suspicious activity reports and pushed to close the accounts. Senior executives overrode them, according to the agreement, and the scheme wasn’t shut down until it had resulted in a loss of nearly $6.3 million. EagleBank willfully failed to maintain an adequate anti-money laundering program between 2010 and 2021, per the DOJ.
This is EagleBank’s second multimillion-dollar regulatory bill tied to the Paul era. The Federal Reserve fined the bank $9.5 million and permanently barred Paul from banking in 2022 over roughly $100 million in undisclosed insider lending, part of a combined $22.9 million SEC-and-Fed settlement. Two separate enforcement tracks, one common thread: executives protecting insiders over compliance’s objections. Assistant Attorney General A. Tysen Duva put it bluntly, banks “must be gatekeepers, not gateways.”
EagleBank says the conduct is historical and it’s overhauled compliance and leadership since. That overhaul continues: incoming CEO Stephen Curley, formerly of Western Alliance, starts next week, replacing Susan Riel, who announced her retirement last November. The nonprosecution agreement requires EagleBank to keep cooperating with the DOJ and self-report any future criminal violations, a compliance leash that outlasts the current headline.
James Okafor