Minnesota State Wire

WASHINGTON  – On May 10, 2023, Sen. Tina Smith (D-MN), wrote a letter to JPMorgan Chase’s CEO, Jamie Dimon, demanding answers following recent reports and court filings describing the bank’s financial involvement with Jeffrey Epstein. In her letter, Smith pressed Dimon for the bank’s policies and procedures around identifying and reporting human trafficking after allegations surfaced that JPMorgan ignored obvious signs of Epstein’s illegal activity and maintained its relationship with him against the advice of its own compliance department.

“If true, JPMorgan’s decision to turn a blind eye to such egregious misconduct raises serious questions about its role in facilitating Epstein’s abuse, and its willingness or ability to root out and prevent other, less apparent instances of sex trafficking,” wrote Senator Smith

According to an April 12 court filing, Epstein was a client at JPMorgan from 1998 to 2013 and maintained upwards of 50 accounts totaling hundreds of millions of dollars.  This not only granted him access to exclusive banking and wealth management services, but apparently earned him the bank’s discretion.

The filing alleges that in 2006, two years before Epstein was convicted for soliciting a minor for prostitution, a JPMorgan Rapid Response Team flagged internally that Epstein was making cash withdrawals ranging from $40,000 to $80,000 several times per month.  By that year, the bank was reportedly aware that Epstein paid cash to have underage girls and young women trafficked to his home.  This apparently became an open secret among senior executives, even devolving into a topic of jest.  Still, the bank maintained its relationship with Epstein for several more years, including after his conviction.

A copy of the letter can be found here or below:

Dear Mr. Dimon:

I am deeply troubled by recent news reports and court filings describing JPMorgan Chase’s ties to indicted sex trafficker Jeffrey Epstein. These include allegations that the bank ignored obvious signs of Epstein’s illegal activity and maintained a presumably lucrative relationship with him against the advice of its own compliance department. If true, JPMorgan’s decision to turn a blind eye to such egregious misconduct raises serious questions about its role in facilitating Epstein’s abuse, and its willingness or ability to root out and prevent other, less apparent instances of sex trafficking.

Under the Bank Secrecy Act (BSA), financial institutions are generally required to report cash transactions exceeding a daily aggregate of $10,000. For transactions totaling more than $5,000, financial institutions are required to file a Suspicious Activity Report with the Financial Crimes Enforcement Network (FinCEN) if they involve potential criminal activity. This threshold is relatively low and can include transactions that have no business or apparent lawful purpose, are not the type the customer would normally engage in, or those the institution has no reasonable explanation for after examining the available facts.

According to an April 12 court filing, Epstein was a client at JPMorgan from 1998 to 2013 and maintained upwards of 50 accounts totaling hundreds of millions of dollars.[1] This not only granted him access to exclusive banking and wealth management services, but apparently earned him the bank’s discretion. The filing alleges that in 2006, two years before Epstein was convicted for soliciting a minor for prostitution, a JPMorgan Rapid Response Team flagged internally that Epstein was making cash withdrawals ranging from $40,000 to $80,000 several times per month.[2] By that year, the bank was reportedly aware that Epstein paid cash to have underage girls and young women trafficked to his home.[3] This apparently became an open secret among senior executives, even devolving into a topic of jest.[4] Still, the bank maintained its relationship with Epstein for several more years, including after his conviction.

In 2019, the U.S. Attorney for the Southern District of New York charged Epstein with sex trafficking of minors. The indictment alleged that “from at least 2002 through at least 2005,” Epstein exploited dozens of girls by paying them hundreds of dollars in cash for performing sexual acts.[5] Some of his victims were as young as 14 years old. Nearly a decade earlier, JP Morgan compliance officials allegedly concluded that the bank should drop Epstein as a client.[6] In 2011, court documents show, one official raised numerous red flags, including his sponsorship of bank accounts and credit cards for young women in 2004, and the possibility that he was using a modeling agency as a front to traffic young women into the country.[7]

JPMorgan’s apparent failure to act on these signs demonstrates a flagrant disregard for the law and a callous pursuit of profits over the human cost of Epstein’s heinous crimes. While JPMorgan has denied knowledge of Epstein’s illegal conduct, I trust that the truth will come to light as the legal process plays out. However, the fact remains that Epstein’s abuse and exploitation of young girls took place under JPMorgan’s watch. Furthermore, this would not be the first time the bank has failed to thwart major and obvious criminal activity, including the Bernie Madoff Ponzi scheme.

In order to better understand how this slipped past the bank’s internal controls and whether it can be trusted to identify and prevent future criminality in the future, I request answers to the following questions by May 24, 2023:

1. What are JPMorgan’s policies and procedures to identify, report, and prevent human trafficking?
2. Do you believe that those policies and procedures worked effectively with respect to the handling of Jeffrey Epstein’s accounts? If they did work, please explain why Epstein remained a customer of JPMorgan, with extensive suspicious cash withdrawals and wire transfers, for seven years after he was charged and five years after he was convicted of child sex trafficking?  If JPMorgan’s policies were not effective, what steps have you taken to address deficiencies in your policies and practices?
3. If JPMorgan failed to identify, report, and address Epstein’s human trafficking for more than a decade, despite his notoriety and what appear to be glaring red flags in his account activity, what should provide confidence that JPMorgan is carrying out its responsibilities to address trafficking in cases that are less high profile or less visible?
4. JPMorgan seems to have moved from enforcement action to enforcement action – a Consent Cease & Desist Order with the Office of the Comptroller of Currency in 2013 related to systemic deficiencies in its BSA compliance, its failure to detect and report the massive fraud committed by Bernie Madoff, and the London Whale trading scandal, to name a few. More recently, senior executives – including some associated with Epstein’s relationship with JPMorgan – were fined for taking advantage of unrecorded communication channels. How does JPMorgan explain this series of compliance failures?  What steps have you – and should you – take to ensure a culture of compliance at the bank?
5. When asked about Epstein in an interview with CNN, you said “hindsight is a fabulous gift.” Yet it is clear from court filings that compliance officers knew at the time about the red flags. What actions did JPMorgan take at the time it was providing banking services to Epstein to ensure that the bank was not being used to support illegal activities?
6. Did JPMorgan Chase report any activities in Epstein’s account to the relevant authorities, as required by the BSA?  If so, how many times did JPMorgan report such activities and what were the grounds for the reports?  To whom did JPMorgan share information regarding Epstein’s financial activities?  Did JPMorgan identify to law enforcement, at any point before it ceased doing business with Epstein, any individual who might be the victim of Epstein’s sex trafficking?
7. Did JPMorgan senior executives have the authority to overrule legal and compliance officers who believe an account should be terminated? If so, why is that? What processes are in place to ensure that JPMorgan does not allow its own profits or bankers’ compensation to outweigh the professional judgment of its compliance officials?
8. According to your own complaint, a single executive, Jes Staley, was able to ensure that Epstein was able to remain a customer of the bank. Why would a single executive have had that authority and why were other senior bankers or compliance officials who were involved in or reviewed Epstein’s business with the bank not able to ensure that Epstein’s banking privileges were terminated?
9. Has JPMorgan made changes in its policies and procedures to address its handling of Jeffrey Epstein’s business with the bank? Have any of its employees been disciplined?
10. It is well known that significant cash withdrawals are a red flag for human trafficking or other illegal activity. Indeed, in Epstein’s case, there was public information that he was paying victims and recruiters in cash. What steps did JPMorgan take to identify and address Epstein’s withdrawals of cash?
11. How many clients has JPMorgan terminated or reported for human trafficking each year since 2006? How many of those clients were high wealth customers of JPMorgan’s private bank?

Sincerely,

Original source can be found here.