FinCEN And OCC Penalize Texas-Based Bank For AML Violations

FinCEN and the OCC penalized a Texas-based bank for willful violations of the Bank Secrecy Act ("BSA") and its implementing regulations. The civil money penalty comes after the bank, which services small- to mid-sized businesses as well as professionals, admitted that it failed to implement an AML program.

In determining that the bank's AML program was inadequate, FinCEN considered several shortcomings, including that:

• the bank's compliance office was understaffed, requiring BSA analysts to skip reviewing supporting documentation as they reviewed over 100 case alerts per day;
• bank analysts improperly cleared case alerts without investigating the customer activity that caused the case alerts;
• Customer Due Diligence questionnaires were not regularly updated and therefore lacked "critical" information; and
• the bank failed to file suspicious activity reports even though it knew that certain customers were subject to criminal investigations and may have engaged in illegal activities, such as tax evasion, illegal gambling and money laundering.

Separately, the OCC found that the AML deficiencies resulted in the bank's failure to "timely file complete suspicious activity reports for approximately $100 million of suspicious activity."

To settle the charges, the bank agreed to an $8 million civil monetary penalty with FinCEN, $1 million of which will be credited against a separate civil monetary penalty agreed on with the OCC in connection with its parallel investigation.

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