HARRISBURG — EagleBank has agreed to pay more than $9.7 million and entered into a non-prosecution agreement to resolve a federal investigation into violations of the Bank Secrecy Act, U.S. Attorney Brian D. Miller announced Tuesday.

According to the U.S. Attorney’s Office for the Middle District of Pennsylvania, the community bank, which operates in Maryland, Virginia and the District of Columbia, admitted it willfully failed to maintain adequate anti-money laundering and countering the financing of terrorism programs between 2010 and 2021.

Federal prosecutors said the bank knowingly allowed a father and son to operate a check-kiting scheme through EagleBank accounts for more than a decade despite repeated efforts by compliance personnel to close the accounts.

A check-kiting scheme involves writing checks for more money than is available in an account and using the delay in bank processing to create the appearance of sufficient funds.

According to prosecutors, the father was a friend and business partner of the bank’s former chairman and chief executive officer, who resigned in 2019. Senior bank executives allegedly overrode compliance officials’ efforts to stop the fraudulent activity, resulting in nearly $6.3 million in losses to another financial institution.

“It is simply unacceptable for financial institutions to permit fraud under their noses,” Miller said in a statement.

Under the agreement, EagleBank will pay a $9.06 million fine and forfeit an additional $736,515, representing proceeds from overdraft fees collected from the accounts involved in the scheme. The bank also agreed to strengthen its anti-money laundering compliance program, cooperate with the Justice Department’s investigation and report future violations of federal criminal law.

The FBI investigated the case.