JPMorgan Chase will pay more than $2 billion (£1.2 billion) of penalties to settle charges by U.S. federal authorities that it failed to report suspicious activity involving Bernard Madoff's Ponzi scheme.

The $2 billion sum includes the largest forfeiture a bank has ever had to pay to resolve anti-money laundering violations.

As part of the deal, JPMorgan is admitting to a laundry list of failures to explore red flags it found. This led to the government's conclusion that it violated laws requiring it to monitor customer activity for money laundering during its two-decade relationship with Madoff, authorities said on Tuesday.

Preet Bharara, U.S. Attorney for the Southern District of New York, said "One reason, among others, that Madoff was able to get away with his crime for so long was that JPMorgan had an inadequate and ineffective anti-money laundering program."

Among the failures included in a detailed statement of facts released by U.S. prosecutors are instances dating back to the early 1990s in which JPMorgan employees acknowledged to each other that Madoff was engaging in improper behaviour but did not report it to authorities or end the banking relationship.

"As early and as far back as 1998, a bank fund manager concluded that Madoff's returns were quote "possibly too good to be true" closed quote. And that there were too many red flags," said Bharara.

The penalties JPMorgan agreed to pay will resolve another probe for the largest U.S. bank, which faces at least eight other government investigations covering everything from its hiring practices in China to whether it manipulated the Libor benchmark interest rate.

The deal announced Tuesday (January 7) includes a two-year deferred prosecution agreement and settles outstanding probes by multiple bank regulators into failures in JPMorgan's anti-money laundering policies. The bank also agreed to improve its controls.

Presented by Adam Justice