Bernard Madoff
JPMorgan Chase has settled with US authorities over Bernard Madoff allegationsReuters

JPMorgan Chase has agreed to pay $1.7bn to US authorities to settle allegations relating to Bernard Madoff's Ponzi scheme.

US authorities accused the bank of ignoring the warning signs that Madoff was engaged in a fraud of colossal proportions on two accounts.

According to US Department of Justice document, JPM failed on two counts: firstly for not filing a suspicious activity report; secondly for failing to maintain an anti-money laundering programme.

JPM entered into a deferred prosecution agreement with the office of Preet Bharara, the US attorney in Manhattan, New York.

Bharara, who is in charge of the Madoff victim's fund, has been chasing up compensation for the victims the enormous fraud.

A JPM spokesman acknowledged that the bank "could have done a better job pulling together various pieces of information and concerns about Madoff from different parts of the bank over time.

"We do not believe that any JPMorgan 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," said JPM.

In 2009, Madoff was sentenced to 150 years in prison for controlling a fraudulent scheme worth over $65bn. His brother Peter Madoff also pleaded guilty in 2012 for his part in the fraud and was sentenced to 10 years in jail.