- within Cannabis & Hemp topic(s)
On June 30, the DOJ announced that a community bank entered into a non-prosecution agreement and agreed to pay more than $9.7 million to resolve an investigation into violations of the Bank Secrecy Act. The DOJ alleged that the bank willfully failed to maintain an adequate anti-money laundering and countering the financing of terrorism (AML/CFT) program, in violation of the Bank Secrecy Act.
According to the agreement, between 2010 and 2021, the bank failed to maintain adequate AML/CFT controls related to suspicious customer activity. Specifically, the DOJ alleged that the bank:
- Failed to address repeated suspicious activity. The bank allegedly allowed certain customers to continue using accounts after identifying suspicious activity, including potential check kiting activity, despite compliance personnel recommending additional review or account closure.
- Lacked sufficient controls for high-risk customers. The bank allegedly did not have adequate procedures governing how account closure decisions should be made, who was responsible for those decisions, what documentation was required, or the applicable timeline for review.
- Overrode compliance recommendations. The DOJ alleged that certain bank personnel allowed business considerations to override compliance concerns, resulting in continued account access for customers subject to multiple suspicious activity reports.
- Failed to prevent ongoing fraudulent activity. The DOJ alleged that weaknesses in the bank’s AML/CFT program allowed a check kiting scheme to continue for more than a decade, resulting in approximately $6.3 million in losses to another financial institution.
As part of the resolution, the bank agreed to pay a $9 million penalty and forfeit approximately $736,000 in proceeds from overdraft fees associated with the accounts involved in the alleged conduct. The bank also agreed to continue enhancing its AML/CFT program, cooperate with the DOJ’s investigation, report potential violations of federal criminal law, and provide updates regarding remediation efforts.
Putting It Into Practice: The resolution highlights the DOJ’s continued role in financial services enforcement amid broader changes to the federal enforcement landscape (previously discussed here). Financial institutions should ensure that AML/CFT policies clearly define escalation procedures, account closure review processes, documentation requirements, and responsibilities for managing high-risk customer relationships.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
