JPMorgan Chase & Co
The lobby of JP Morgan headquarters is photographed through it's front doors in New York on May 11, 2012. Reuters/Eduardo Munoz

JPMorgan Chase & Co (NYSE:JM) is expected to pay more than $2 billion in penalties to federal authorities for its alleged failure to alert the government about Bernard Madoff's Ponzi scheme, media reports, citing people familiar with the negotiations, said on Monday.

The New York-based bank’s civil and criminal settlements with federal prosecutors in Manhattan and regulators in Washington, which will include a deferred prosecution agreement with Manhattan U.S. Attorney Preet Bharara, could be announced as early as Tuesday, the Wall Street Journal reported. JPMorgan was the primary bank for Madoff for almost two decades, until his arrest in December 2008. Madoff subsequently pleaded guilty to charges that he ran a massive Ponzi scheme, which cheated investors of billions of dollars, and is currently serving a 150-year prison sentence.

Out of the settlement amount, up to $1.5 billion will go to the prosecutors and could be used to compensate Madoff's victims, while the remainder will go to the Office of the Comptroller of the Currency, or OCC, and the Financial Crimes Enforcement Network, both of which are units of the Treasury department, the Journal said.

According to the agreement with the prosecutors in Manhattan, an indictment against the bank in the case will be delayed as long as the company acknowledges the facts of the government’s case and changes its behavior, the New York Times reported. The tactic, which is typically employed “only when misconduct is extreme,” indicated the magnitude of the charges against the bank, the Times report added.

The agreement is the latest in a series of legal settlements involving the largest U.S. bank, which so far has agreed to pay roughly about $20 billion to settle several lawsuits and investigations related to its sale of mortgage securities and other trades during and after the 2008 financial crisis.

Madoff, during interrogations, had revealed that JPMorgan chose to suppress facts about their relationship, during a OCC investigation. According to a Reuters report, the Treasury department’s Office of the Inspector General was probing the allegation that the bank tried to interfere with the OCC probe.

Adding to the damage were internal emails sent by JPMorgan’s officials before Madoff’s arrest, which clearly indicated that the bank had some knowledge of the Ponzi scheme.

According to federal law, the banks have to file a suspicious-activity report, or SAR, when they "detect certain known or suspected violations of federal law or suspicious transactions," and prosecutors have been examining whether JPMorgan failed to do so in Madoff’s case.