Delaware Supreme Court
911 A.2d 362 (Del. 2006)
AmSouth Bancorporation (AmSouth) was forced to pay $50 million in fines and penalties on account of government investigations about AmSouth employees’ failure to file suspicious activity reports that were required by the Bank Secrecy Act (BSA) and anti-money-laundering (AML) regulations. AmSouth’s directors were not penalized. The Federal Reserve and the Alabama Banking Department issued orders requiring AmSouth to improve its BSA/AML practices. The orders also required AmSouth to hire an independent consultant to review AmSouth’s BSA/AML procedures. AmSouth hired KPMG Forensic Services (KPMG) to conduct the review and KPMG found that the AmSouth directors had established programs and procedures for BSA/AML compliance, including a BSA officer, a BSA/AML compliance department, a corporate security department, and a suspicious banking activity oversight committee. The plaintiffs nonetheless brought suit against AmSouth directors (defendants) for failure to engage in proper oversight of AmSouth’s BSA/AML policies and procedures. The Delaware Court of Chancery dismissed the plaintiffs’ complaint. The plaintiffs appealed.
Rule of Law
Holding and Reasoning (Holland, J.)
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