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NEW YORK — Before Bernard L. Madoff was charged with stealing billions of dollars from his clients, and before he received a 150-year prison sentence for those crimes, JPMorgan Chase missed its chance to warn federal authorities about his Ponzi scheme.
On Tuesday, five years after Madoff’s arrest set off a panic on Wall Street and in Washington, Madoff’s primary bank received a punishment of its own.
Federal prosecutors in Manhattan imposed a $1.7 billion penalty on JPMorgan for two felony violations of the Bank Secrecy Act, a record payout under that 1970 law, which requires banks to alert authorities to suspicious activity. The prosecutors, essentially accusing the nation’s biggest bank of turning a blind eye to Madoff’s fraud, will require JPMorgan to pay the $1.7 billion to his victims.