Bethesda, Maryland-based EagleBank has agreed to pay more than $9.7 million to resolve a federal investigation into Bank Secrecy Act (BSA) violations, including failures to maintain an adequate anti-money laundering (AML) program and allowing customers to engage in check kiting fraud. The resolution, announced by the U.S. Department of Justice (DOJ) in late June 2026, includes a one-year non-prosecution agreement and marks another significant regulatory enforcement action against the institution in recent years.
Settlement details and financial breakdown
Under the terms of the settlement, EagleBank will pay approximately $9.1 million in civil penalties and forfeit more than $700,000, representing proceeds the bank earned from overdraft fees on accounts involved in the check kiting scheme. The forfeiture component is consistent with the bank’s ill-gotten gains from the fraudulent activity, according to the non-prosecution agreement filed with the court.
The total payment of $9.7 million resolves allegations that the bank willfully failed to establish and maintain an effective AML and countering the financing of terrorism (CFT) program between 2010 and 2021. During this period, EagleBank allegedly allowed customers to exploit the deposit float period by engaging in check kiting—a form of check fraud in which nonexistent funds are deposited into a secondary account to create the appearance of available balances.
Nature of the violations: check kiting and AML failures
Check kiting schemes typically involve writing checks from one account with insufficient funds and depositing them into another account before the first check clears, thereby creating artificial balances that can be withdrawn or used for additional transactions. The DOJ’s investigation found that EagleBank knew it had allowed clients to operate such a scheme but failed to take appropriate action to stop the activity or report it to authorities as required under the BSA.
The bank’s deficiencies extended beyond the check kiting issue. According to the agreement, EagleBank willfully failed to establish an adequate AML/CFT program for more than a decade, a core requirement under U.S. financial crime laws. The BSA mandates that banks implement comprehensive compliance programs including customer due diligence, transaction monitoring, suspicious activity reporting, and internal controls to detect and prevent money laundering and other financial crimes.
Compliance obligations under the resolution
As part of the settlement, EagleBank has agreed to implement enhanced compliance measures to strengthen its AML and CFT programs. These measures are designed to address the systemic failures identified during the investigation and ensure the bank meets its regulatory obligations going forward. The non-prosecution agreement requires the bank to maintain these improvements for the duration of the one-year term, during which time federal authorities will monitor compliance.
The DOJ’s action underscores the increasing regulatory scrutiny of community banks and regional lenders over their BSA/AML compliance frameworks. Financial institutions are expected to maintain robust programs capable of detecting suspicious activity, including check fraud schemes that can be exploited for money laundering purposes.
Context: prior enforcement actions against EagleBank
This latest settlement adds to a series of regulatory enforcement actions against EagleBank and its parent company, Eagle Bancorp Inc. (NASDAQ: EGBN). In August 2022, the Federal Reserve Board fined EagleBank $9.5 million for violations of insider lending regulations, while the Securities and Exchange Commission (SEC) imposed an additional $13.4 million penalty on the holding company for failing to properly disclose related-party loans.
The 2022 enforcement actions centered on allegations that between 2015 and 2018, EagleBank extended nearly $100 million in credit to entities owned or controlled by its then-CEO and Chairman, Ronald D. Paul, without obtaining required board approvals or making appropriate disclosures. Paul, who retired in March 2019, was permanently barred from the banking industry and ordered to pay additional penalties in connection with the settlements.
In total, EagleBank and its affiliates have paid more than $22 million in penalties related to the insider lending violations, making the latest BSA settlement another significant financial and reputational blow to the institution.
Regulatory and industry implications
The EagleBank case highlights several key trends in U.S. financial regulation, particularly the heightened focus on BSA/AML compliance at community banks and the willingness of regulators to pursue enforcement actions even against institutions that have previously faced penalties. The DOJ’s decision to enter into a non-prosecution agreement rather than pursue criminal charges suggests that the bank cooperated with the investigation and agreed to implement corrective measures, but the substantial financial penalties reflect the seriousness of the violations.stocktitan+2
For the broader banking industry, the settlement serves as a reminder of the importance of maintaining effective AML programs and internal controls to detect and prevent check fraud and other financial crimes. Regulators have increasingly emphasized that banks must not only have policies in place but also ensure those policies are implemented effectively and consistently across all operations.
The case also illustrates the intersection between check fraud and money laundering risks. While check kiting is traditionally viewed as a form of fraud, it can also be exploited to launder illicit funds by creating artificial transaction flows that obscure the origin of money. As such, BSA/AML programs must be designed to detect not only classic money laundering typologies but also fraud schemes that may facilitate financial crime.
EagleBank’s response and outlook
EagleBank has not publicly commented in detail on the settlement beyond acknowledging the resolution in regulatory filings. The bank’s parent company, Eagle Bancorp, disclosed in a June 2026 SEC filing that it had secured a one-year non-prosecution agreement with the DOJ and that the $9.8 million payment (a figure that includes the forfeiture component) had already been fully funded.
The resolution of the DOJ investigation removes a significant regulatory uncertainty for Eagle Bancorp, which had previously disclosed in 2024 that it was under investigation for potential AML violations related to its former CEO’s tenure. With the settlement now in place, the bank can focus on implementing the required compliance enhancements and rebuilding trust with regulators and customers.
However, the repeated enforcement actions against EagleBank raise questions about the institution’s governance and risk management culture. The bank will need to demonstrate sustained compliance improvement