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Bank of Montreal ordered to fix oversight lapses

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May 17, 2013 05:46 PM EST | AP

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WASHINGTON — Federal regulators are ordering the Bank of Montreal to take steps to correct lapses in oversight that could allow the bank to be used for money laundering.

The Federal Reserve announced an agreement Friday with the bank, which is Canada's fourth-largest by assets. The Fed cited procedural deficiencies to prevent money laundering in the bank and its Chicago branch.

No financial penalty was imposed on the bank under the agreement. The bank agreed to submit detailed plans to the Fed and to Illinois banking regulators for strengthening its programs and correcting problems.

The remedial actions "are well under way," Bank of Montreal spokesman Paul Deegan said in a statement. The bank is "fully committed to the highest standards of regulatory compliance" with anti-money laundering rules in all of the jurisdictions in which it operates, Deegan said.

In addition to Canada and the U.S., the bank has offices around the world.

Money laundering attempts to take profits from illicit activities like drug dealing or arms trafficking and pass them through bank accounts or other legitimate businesses to obscure their origins.