WASHINGTON -- Federal authorities said Monday that American Express was ordered to pay the government millions of dollars in penalties for alleged violations of anti-money laundering provisions.

The Federal Reserve and the Treasury Department's Financial Crimes Enforcement Network - known as FinCen - said their orders are part of a coordinated action with the Justice Department.

"The payments to be made by the American Express entities under these actions total $65 million," according to a joint release issued by the Fed and FinCen.

Federal authorities accused American Express Bank International of Miami and American Express Travel Related Services Co. Inc. of Salt Lake City of violating the Bank Secrecy Act. Both entities - without admitting any wrongdoing - consented to the penalties assessed by the Fed and FinCen, the two agencies said in their joint release.

"We have cooperated fully with the government and understand the need for absolute vigilance in our efforts to protect against money laundering," said American Express spokeswoman Susan Atran. "We have already made substantial efforts to augment and strengthen our compliance programs and will continue to do so. We are firmly committed to the agreements we have reached and to conducting our business with the highest standards of integrity, compliance and control."

The Fed determined that American Express Bank International had significant breakdowns in carrying out compliance activities under the Bank Secrecy Act. It said the company failed to create an adequate anti-money laundering program as well as procedures designed to monitor compliance.

Banks and other financial institutions are required to have anti-money laundering programs in place. Those programs are important to government efforts to catch terrorist financiers, drug lords and other criminals. Financial companies also are responsible for reporting suspicious financial transactions to the government.

FinCen, among other things, determined that American Express Travel Related Services "failed to file a significant number of suspicious activity reports" in accordance with the Bank Secrecy Act.

SUSPICIOUS SHELLS

Investigators also identified private banking accounts controlled by apparently legitimate South American businesses but held in the name of offshore shell corporations that could have been used for transactions at high risk for money laundering.

In one case, hundreds of thousands of dollars in drug proceeds were transferred into the targeted accounts by law enforcement agents, operating undercover as they moved money from drug traffickers and Colombian money brokers, the statement said.

''The violations at [American Express Bank International] were serious and systemic and allowed millions of dollars of financial transactions involving proceeds from the sale of illegal narcotics to be conducted by others through [the bank's] accounts,'' prosecutors said in the statement of facts.

American Express Bank International failed to know its customers or the sources of some of the funds, the government said.

A YEAR AWAY

The government will recommend dismissal of the criminal charge in 12 months as long as the bank continues its remedial program to tighten numerous measures against money laundering. Authorities also would move to dismiss the charges if the bank were sold or underwent ownership changes.

American Express Bank International will also pay $10 million in civil penalties assessed by the Federal Reserve and the Financial Crimes Enforcement Network (FINCEN).

The Federal Reserve, citing a ''significant breakdown'' in anti-money laundering proceedings, issued a cease and desist order to the bank and assessed a $20 million penalty. FINCEN assessed a $25 million penalty.

But both institutions agreed that all but $5 million of each penalty will be considered satisfied by the payment to the Justice Department, bringing the total to $65 million.

The information describing the settlement in the deferred prosecution was filed in U.S. District Court in Miami but the case was handled out of Washington by Justice and investigated by the Drug Enforcement Administration.