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Capital One Embroiled in Check-Casher Money-Laundering Case

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Capital One Financial Corporation (COF - Free Report) , the McLean, VA-based credit services firm has received subpoenas from the New York District Attorney’s Office as part of a money-laundering investigation, per a Bloomberg report. The probe pertains to its commercial banking business of certain check-casher customers.

According to the bank sources, Capital One is gradually withdrawing from its business of providing services to check-cashers clients and similar types of companies. This is because it no longer fits into the scheme of things for the bank.

Regulators have recently been keeping a strict vigil to prevent money-laundering frauds committed by big banks. Federal Deposit Insurance Corporation, the independent agency responsible for ensuring safety of the depositors’ accounts, ordered Discover Financial Services (DFS - Free Report) to shore up its anti money-laundering practices. In compliance with the order, the Riverwoods, IL-based credit services company took steps to tighten its payments system.

Amid strict scrutiny by regulators and consumer advocates, many banks are revoking the practice of short-term payday lending. Among the banking heavyweights, U.S. Bancorp (USB - Free Report) and Wells Fargo & Company (WFC - Free Report) have already repealed advance loans to direct-deposit customers.

Regarding the latest case, Capital One has assured every cooperation to facilitate the investigation. Whatever the outcome, we can expect regulators to stop gullible depositors from being cheated of their rightful earnings.

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