Alert June 25, 2013

FRB Takes Enforcement Action Against Bank for AML Violations

The Federal Reserve Bank of New York settled with a bank holding company and its a state-chartered bank for violations of the Bank Secrecy Act. The settlement comes after the FRB’s inspection of the bank’s anti-money laundering compliance programs, in which the FRB found deficiencies in the bank’s compliance risk management program, internal controls, customer due diligence procedures and transaction monitoring processes with respect to compliance with BSA/AML requirements and a non-bank subsidiary’s due diligence practices involving foreign correspondent accounts.

The terms of the settlement require both the bank holding company and the bank to submit quarterly reports to the FRB, submit an acceptable revised written BSA/AML compliance program, which includes policies and procedures that ensure account holders are identified and verified and submit a revised suspicious activity monitoring and reporting program. The bank is also required to submit an acceptable revised program for conducting customer due diligence and engage an independent consultant to conduct an account and transaction review to determine whether suspicious activity monitoring and reporting was conducted properly from July 1, 2012 through December 31, 2012.