The Financial Crimes Enforcement Network ("FinCEN") assessed a $500,000 civil money penalty against New York-based credit union for violations of anti-money laundering ("AML") regulations.
According to the FinCEN release, the credit union's AML program maintained internal controls specifically for its low to moderate-income clientele within its designated field of membership in New York City. However, after beginning to provide banking services to many wholesale, commercial money services businesses located in "high-risk" jurisdictions that engaged in "high-risk" activity, the credit union did not take steps to update its AML program. As a result, according to FinCEN, the credit union was unable to adequately monitor, detect, and report suspicious activities or mitigate the associated risks, leaving the credit union "particularly vulnerable" to money laundering.
FinCEN determined that the credit union failed to timely detect and report suspicious activity to FinCEN and did not file any Suspicious Activity Reports ("SARs") until a mandated review of prior transactions yielded twenty-eight late-filed SARs. Most of these SARs were found by FinCEN to be inadequate and contained "short, vague narratives encompassing a broad summary of multiple and unrelated instances of suspicious activity."
The credit union, which was liquidated by the National Credit Union Administration in December 2015, was assessed a civil monetary penalty of $500,000, which FinCEN has indicated will be a claim against any assets remaining after the completion of the credit union's liquidation.
Commentary / Steven Lofchie
The case illustrates how even a small banking institution can facilitate, whether intentionally or not, significant money transfers of questionable legality. The failures with which the credit union was charged were similar to those which the federal regulators have warned larger institutions about: not being sufficiently aggressive in filing SARs and not providing sufficient detail in filings.
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