Aug 23 JPMorgan Chase & Co, the biggest bank in the United States, will not take on more correspondent relationships with foreign banks in a move to comply with orders from regulators to tighten risk controls, including safeguards against money laundering.
The decision was announced in an Aug. 15 memo to employees in the company's Treasury Services unit, according to a person who has seen the memo who asked not to be named as the information is not public.
The decision and existence of the memo were reported by the Wall Street Journal on its web site on Friday.
Correspondent banking has historically been one of JPMorgan's core franchises and the bank has long boasted that it is the bankers' bank, the memo noted. The bank has thousands of correspondent banks with which it moves money from one account to another.
While the bank said it will not take on new business "until further notice," the memo added that JPMorgan is "not exiting the correspondent banking business" and will continue to provide current services to existing clients.
In a statement issued in response to the report, the bank said, it is "important for us to pause and assess our business, particularly in select markets, to ensure we are well-positioned to meet our responsibilities for the long-term."
In January, JPMorgan agreed to consent to orders from U.S. bank regulators that it improve its risk controls, including its systems for abiding with anti-money laundering requirements.
The actions followed stepped up examinations of the bank by regulators following JPMorgan's $6.2 billion derivatives loss on its so-called "London Whale" trades.
In April, CEO Jamie Dimon said the company was postponing some investments in growing its business and changing staff Passigments in time in order to make improving its control systems its top priority.