EagleBank To Pay Over $9.7M Over Money Laundering Probe

BETHESDA, MD — EagleBank, a Bethesda-based community bank with branches across D.C., Maryland and Virginia, will pay more than $9.7 million in fines after a federal investigation uncovered a history of banking violations.

Both EagleBank and its parent entity, EagleBancorp Inc., signed onto a non-prosecution agreement on Tuesday in response to the Justice Department's findings that it violated the Bank Secrecy Act.

What Did The Investigation Find?

The agreement outlines that between 2010 and 2021, officials failed to establish a program that prevents money laundering and financing terrorism (AML/CFT), which is specifically required under the BSA.

Investigators found that despite criminal activity being flagged by financial compliance officers, senior bank executives chose to override alerts.

In fact, in one case highlighted by the department, a father-son duo engaged in a check kiting scheme where they knowingly wrote checks from an account that didn't have sufficient funds and deposited them into secondary banks. The father in the case later turned out to be a friend and business partner of EagleBank's since-resigned CEO.

The scheme resulted in a total of $6.3 million in losses.

What's Next?

“For more than a decade, EagleBank knowingly allowed favored clients to operate a check kiting scheme, even as compliance personnel repeatedly tried to stop it,” said Assistant Attorney General A. Tysen Duva, of the Justice Department’s Criminal Division.

“Financial institutions are the first line of defense against financial crimes and must be gatekeepers, not gateways, for criminal activity.

In addition to paying the fines, EagleBank has agreed to not only implement an AML/CFT program but also report any future federal law violations.