Bank failed to investigate discrepancies in deposit slips, resulting in millions, say federal regulators.
Federal regulators announced Wednesday that Citizen’s Bank will be forced to pay approximately $35 million in penalties and restitution for failing to investigate discrepancies in bank deposits.
The article on usatoday.com reported the bank realized millions of dollars by not reporting the errors to depositors. The bank kept the differences that arose when customers’ totals on their deposit slips did not match the actual amount deposited, say regulators. Citizen’s Bank operates branches in a dozen states.
Investigators from the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau found the irregularities occurred during the period of Jan. 1, 2008 and Nov. 30, 2013.
The investigators said the bank deposited the sum on the deposit slip instead of the actual amount and did not investigate any discrepancies below $50 or $25, depending on the time frame of the differences. They also said that even though the bank told customers deposits would be verified, it failed to do so when the amounts were $50 or $25.
Citizens said it was satisfied with the arrangement and that their procedures in the past could have been better. The bank has implemented a new teller procedure which has made reconciliation automatic and they believe their process is among the best in the country.
The firm also said they are working with the regulators to make amends as quickly as possible.
Under the plan, the bank will pay approximately $14 million to customers who lost money because of the bank’s procedures, and will pay $20.5 million in penalties.
The CFPB began its investigation through a tip from a whistleblower. This was the first time action has been taken against a bank for deceptive practices involving customer deposits. The regulators would not discuss any other banks or firms that may be under investigation at this time.
Shares of Citizens Bank closed down 3.02% at $26.03.