City National Bank, a US subsidiary of Royal Bank of Canada, has been fined $65m by a federal regulator over systemic failures in the bank’s risk management and internal controls.
The $65m civil money penalty imposed by the Office of the Comptroller of the Currency (OCC) will be paid to the US Treasury.
According to the OCC, the City National Bank was found engaged in unsafe practices, including failure to establish effective risk management and internal controls.
The bank’s unsafe practices violated the OCC guidelines establishing heightened standards for certain large insured national banks, insured federal savings associations, and insured federal branches, under 12 CFR Part 30, Appendix D.
It has also breached the Bank Secrecy Act (BSA) and guidelines for the Fiduciary Activities of National Banks, under 12 CFR Part 9.
The OCC issued a cease-and-desist order requiring the bank to take comprehensive corrective measures to improve its strategic plan and operational risk management.
The corrective measures focus on internal controls, compliance, anti-money laundering, fair lending, strategic risk management and investment management practices.
City National Bank in a statement told Reuters: “The bank is committed to resolving the matters identified in the OCC’s order as quickly as possible.
“Our focus will continue to be on both strengthening our infrastructure and systems to reflect a bank of our size and business model.”
The agency previously required the bank to take actions to address the requirements of the Gramm-Leach-Bliley Act (GLBA), and its implementing regulation, 12 CFR 5.39.
In October last year, RBC injected about $2.95bn into its US unit, as a part of management actions to improve profitability at City National.
In November, RBC agreed to pay a $6m penalty to resolve the Securities and Exchange Commission (SEC) charges related to internal accounting controls violations.
According to the SEC, RBC violated the internal accounting controls and books and records provisions of the Securities Exchange Act of 1934.
Between 2008 and 2020, the Canadian lender failed to accurately account for the costs of its internally developed software project.
