U.S. Bank has agreed to pay a total of $613 million in penalties to multiple federal authorities over its failures to properly monitor banking transactions for suspicious activity, federal prosecutors and regulators announced Thursday.

The bank agreed to a $528 million penalty to resolve two felony violations of the U.S. Bank Secrecy Act, as part of a deferred prosecution agreement with the U.S. Attorney's Office of the Southern District of New York announced Thursday.

According to federal prosecutors, the bank—the fifth largest in the country—willfully failed to institute an adequate anti-money laundering program while also failing to file a suspicious activity report. The bank accepted responsibility for its conduct, prosecutors said.

In exchange for a two-year deferred prosecution agreement, the bank agreed to a $453 million civil forfeiture, as well as a $75 million civil penalty assessed by the Officer of the Comptroller of the Currency. Additionally, the bank has agreed to an additional $70 million penalty to settle related regulatory actions taken by the Financial Crimes Enforcement Network.

In a statement, U.S. Attorney Geoffrey Berman called the bank's anti-money laundering program “highly inadequate.”

“The bank operated the program 'on the cheap' by restricting head count and other compliance resources, and then imposed hard caps on the number of transactions subject to AML review in order to create the appearance that the program was operating properly,” he said. “The bank also concealed its wrongful approach from the OCC. As a result, U.S. Bank failed to detect and investigate large numbers of suspicious transactions.”

Prosecutors say beginning in 2009 the bank instituted its caps on alerts from its transaction monitoring system. Rather than setting the alerts that corresponded to a transaction's level of risk, the bank chose to make staffing levels and resources the determining factors. It then “deliberately concealed” its process from the OCC, which is its primary regulator, prosecutors said.

The bank was aware of the problem, with internal memos between top bank officials warning that a “regulator could very easily argue that this testing should lead to an increase in the number of queries worked,” prosecutors said, quoting from the communications. Internal tests by the bank found suspicious activity reports should have been filed on anywhere between 25 to 80 percent of the test transactions. Rather than change its practices, the bank instead simply stopped conducting the internal tests, prosecutors said.

The bank was specifically put on notice that Scott Tucker, the former race car driver convicted last year of racketeering, was using the bank to launder funds from the payday lending scheme he would later be convicted of. For two years, the bank failed to report suspicious activity, prosecutors said, despite closing accounts for shell companies being used by Tucker in 2011. The bank allowed $176 million in illegal funds to flow through its system for Tucker over the next two years.

In a statement, U.S. Bank CEO and president Andy Cecere said the company regrets its past deficiencies.

“Our culture of ethics and integrity demands that we do better,” he said. “One of U.S. Bank's key priorities is to maintain an exceptional AML program and we are confident in the strength of the program we have in place today.”