USAA Federal Savings Bank hit with cease-and-desist from US regulator

USAA Federal Savings Bank was called out for "unsafe and unsound banking practices" in a new order from U.S. regulators. The Office of the Comptroller of Currency issued the cease-and-desist order against the banking giant on Wednesday, December 18, as first reported by the San Antonio Express-News. The OCC issued a cease and desist over the same issues back in 2019 and 2022. 

USAA Federal Savings Bank quietly moved their headquarters from San Antonio to Phoenix, Arizona, in April after more than 40 years in the Alamo City. The company's corporate offices remain in San Antonio. 

The OCC alleges that USAA's banking arm engaged in the unsafe practices, which includes the company's compliance management system, risk governance framework, and information technology program, according to the cease and desist. The company is accused of violating the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program, as well as failing to report BSA violations and suspicious activity reporting. 

The BSA and AML laws aim to detect known or suspected criminal violations of federal law in addition to recording suspicious transactions related to money laundering activity, according to the FDIC. 

Other complaints by the OCC, which mirror actions listed in the 2019 and 2022 orders, include issues with the internal auditing system, Bank-wide Risk Management Program, as well as its "internal controls and information systems." 

The order states that USAA Federal Savings Bank must create a compliance committee made up of at least three people "of which a majority shall be directors who are not employees or officers of the Bank or any of its subsidiaries or affiliates," which will monitor the bank's compliance.

The company is also tasked with creating an action plan to address the issues outlined in the order.

Among the programs that are baked into the plan to remediate the issues is a compliance risk management program that will include an effective internal auditing system; a program to "identify, report, and escalate customer complaints," including social media and ethics complaints; and to "identify and remediate customers adversely affected" by the bank. 

 USAA Federal Savings Bank is also tasked with creating "a risk management program that effectively identifies, measures, monitors, and controls third-party, affiliate, and shared services." A third-party service contracted by USAA, on the insurance side, accidentally exposed customers' personal data in a breach that stretched from December 2022 to May 2023. 

USAA issued a response to MySA about the order: 

"[On December 18], the Office of the Comptroller of the Currency (OCC) issued USAA Bank a new consent order. It outlines requirements to advance the Bank’s risk and compliance management to the level we and our regulators expect. Although our progress has not been consistent or swift enough, the Bank is well-positioned to complete this work. With a stronger foundation in place to prevent and mitigate risk, we will continue to enhance our capabilities and processes to ensure we consistently serve our members with excellence. The order also confirms progress we have made on our BSA/AML program and closes the 2022 consent order.

Moving forward, our path is clear. Managing risk effectively and operating in a compliant fashion are the foundation of serving our members and delivering on our mission. We continue to identify and resolve issues while strengthening the rigor of our programs and processes. We also are investing in additional systems and training while reinforcing the behaviors of a strong risk management culture. Our focus is on getting this right for USAA and our members. USAA’s financials are strong. USAA has the highest possible ratings from S&P, Moody’s and AM Best, and the Bank has capital and liquidity substantially above regulatory requirements."

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