JP Morgan Chase has agreed to pay $1.7 billion to settle criminal allegations that it did not tell US authorities about “suspicious activity” from Bernard Madoff.

JP Morgan Chase has agreed to pay what has been widely reported as $1.7 billion to settle criminal allegations that it did not tell US authorities about suspicious activity from Bernard Madoff.

JP Morgan said in a statement that it filed a Suspicious Activity Report with UK authorities in late October 2008, but did not take a similar step in the US. The bank reportedly knew about Madoff's fraud as early as 1997.

Madoff’s $20 billion Ponzi scheme is considered to be the largest financial fraud in US history, for which he is serving a 150-year prison sentence.

“The prosecutors, essentially accusing the nation’s biggest bank of turning a blind eye to Mr. Madoff’s fraud, will force JP Morgan to pay the sum to his victims,” the New York Times said yesterday.

According to the report, Federal regulators are expected to announce their own rebuke of the bank in a civil case. Overall, JP Morgan is likely to pay some $2 billion to resolve the Madoff investigations.

“We recognise we could have done a better job pulling together various pieces of information and concerns about Madoff from different parts of the bank over time,” JP Morgan said.

“We do not believe that any JP Morgan Chase employee knowingly assisted Madoff’s Ponzi scheme. Madoff’s scheme was an unprecedented and widespread fraud that deceived thousands, including us, and caused many people to suffer substantial losses,” it added.

The bank has also agreed to improve its controls firm-wide.

The news comes after JP Morgan agreed on a $13 billion settlement with the US Justice Department in November 2013 over the mis-selling of mortgage securities in the period leading up to the credit crunch.