By Mary Crotty, freelance writer for banks and third-party service providers
It has been a busy year so far for federal regulators scrutinizing compliance with the Bank Secrecy Act (BSA) and other anti-money laundering (AML) regulations. They have already meted out a combined $1.246 billion in both civil money penalties (CMPs) and criminal fines related to BSA/AML deficiencies at various financial institutions.
BSA/AML Civil Money Penalties So Far in 2018
From the Office of the Comptroller of the Currency (OCC)
The OCC has levied a total of $195 million in CMPs since the start of the year, including $125 million in fines just in the last week. All three of these enforcement actions relate to prior Cease and Desist or Consent Orders regarding the offending institutions’ BSA/AML compliance programs.
- $75 Million CMP Against U.S. Bank N.A.: On February 15, the OCC issued an enforcement action, which noted that the bank “failed to adopt and implement a compliance program that adequately covered the required BSA/AML program elements due to an inadequate system of internal controls, ineffective independent testing, and inadequate training, and the Bank failed to file all necessary Suspicious Activity Reports (SARs) related to suspicious customer activity.”
- $50 Million CMP Against Rabobank, N.A.: On February 7, the OCC issued an enforcement action for deficiencies in this institution’s BSA/AML program.
- $70 Million CMP Against Citibank: On January 4, the OCC issued an enforcement action for Citibank’s failure to comply with a 2012 Consent Order related to BSA/AML deficiencies.
From the Financial Crimes Enforcement Network (FinCEN)
While FinCEN has only issued one BSA/AML-related fine so far this year, at $185 million it almost equaled the total amount of the OCC’s three such fines.
- $185 Million CMP Against U.S. Bank N.A.: On the same day that the OCC fined this bank, FinCEN did too, noting that it “willfully violated the BSA’s program and reporting requirements from 2011 to 2015.”
From the Federal Reserve (FED)
The Fed has issued two enforcement actions since the start of the year for a total of $44 million in CMPs.
- $15 Million CMP Against U.S. Bancorp: While the OCC and FinCEN punished the subsidiary, on February 14, the FED issued this action against the parent corporation and ordered it “to improve risk management and oversight of its banking subsidiaries’ compliance with U.S. economic sanctions, and Bank Secrecy Act and anti-money laundering requirements.”
- $29 Million CMP against U.S. Operations of Mega International Commercial Bank: On January 17, the Fed issued an enforcement action for anti-money laundering violations and “required the firm to improve its anti-money laundering oversight and controls.”
BSA/AML Criminal Actions So Far in 2018
In conjunction with the above-mentioned civil action by the Fed against U.S. Bancorp, the U.S. Attorney for the Southern District of New York announced criminal charges against the institution for two felony violations of the Bank Secrecy Act by its subsidiary. It imposed a $453 million forfeiture in addition to the $75 million CMP by the OCC for a total combined penalty of $528 million.
Rabobank also faced criminal charges from the Department of Justice (DOJ) in addition to the CMP imposed on it by the OCC. The bank “pleaded guilty to a felony conspiracy charge for concealing deficiencies in its AML program and obstructing the OCC’s examination of it.” The DOJ imposed a $368,701,259 forfeiture on the bank.
Expect Intense Regulatory Scrutiny of BSA/AML Compliance Throughout 2018
These civil and criminal actions suggest that federal regulators are increasing their focus on BSA/AML compliance, especially at institutions that have previously been cited for deficiencies in their programs. In addition to preparing for FinCEN’s Customer Due Diligence Rule, which goes into effect on May 11, financial institutions would be wise to review their overall BSA/AML compliance programs to ensure they are effective enough to stand up to such heightened examiner scrutiny.