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Dreher Tomkies LLP
Attorneys at Law
2750 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: 614-628-8000
Fax: 614-628-1600

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Saks Incorporated (Saks) and its subsidiary bank, the National Bank of the Great Lakes (Bank), recently agreed to the issuance of Consent Orders (Orders) by the Office of the Comptroller of the Currency (OCC). The Orders require Saks and the Bank to tighten their anti-money laundering practices and require numerous actions be taken to bolster the Bank Secrecy Act compliance of the entities.

The Orders appear to stem from the way certain private-label credit card transactions were handled, including the receipt of large cash payments on card accounts at retail stores, and the way such cash payments were reported. After investigation, the OCC found undisclosed problems. The OCC required Saks and the Bank to consent to the Orders before consummating a transaction with Household Bank (SB), N.A. for Household to purchase all of the credit card receivables of the Bank.

In the Orders, neither Saks nor the Bank admit to any wrongdoing, but they do agree to certain limitations and requirements, such as:

  • Cash payments over $350 per account per month may not be accepted at retail stores until the OCC determines that Saks and the Bank are complying with the Order;
  • Saks and the Bank must determine whether any large currency transactions occurred for which no Currency Transaction Reports were filed;
  • Saks and the Bank must determine whether any unusual or suspicious transactions or activity occurred at point of sale terminals; and
  • Programs and procedures must be developed to ensure compliance with the Bank Secrecy Act.

While anti-money laundering requirements have long been in force, this enforcement action is a clear indication that compliance with the Bank Secrecy Act has taken on new importance with the OCC and could also signal greater scrutiny of private label programs where in-store payments are allowed particularly with respect to banks affiliated with retailers.

Mike Tomkies and Deborah Freye