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Faulty controlsindependent testing cited in banks 10M BSA penalty
WASHINGTON (8/24/11)--The alleged failure of a Miami bank to implement effective Bank Secrecy Act/anti-money laundering (BSA/AML) with internal controls “reasonably designed to detect and report money laundering and other suspicious activity in a timely manner” has, in part, spurred a walloping $10.9 million civil money penalty for violations of federal and state BSA and AML laws and regulations. The Florida bank involved, Ocean Bank, without admitting or denying the allegations, consented to payment of the penalties, which the bank satisfied with a single payment to the U.S. government. The Federal Deposit Insurance Corporation (FDIC), the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN), and the State of Florida Office of Financial Regulation (OFR)--the agencies making the charges against Ocean--said the bank failed to conduct adequate independent testing, particularly with respect to suspicious activity reporting requirements. In addition, the agencies alleged, the bank failed to sufficiently staff the BSA compliance function with appropriately trained staff to ensure compliance with BSA requirements. "Effective Bank Secrecy Act/anti-money laundering programs commensurate with the risk profile of the institution is paramount in protecting our financial system and individual banks from harm," said Sandra L. Thompson, director of the FDIC’s division of risk management supervision, in a release. "This penalty underscores the significance for banks to have strong internal systems and controls to detect and report suspicious activity and ensure compliance with Bank Secrecy Act requirements." Tom Cardwell, commissioner of the Florida OFR, added, “The OFR will continue to monitor Ocean Bank's efforts to enhance its BSA/AML program. We are confident the bank is committed to be in full compliance with the letter and spirit of the Consent Order and Agreement." In a recent BSA/AML webinar hosted by the Credit Union National Association (CUNA), Judy Graham of the National Credit Union Administration's (NCUA) Office of Examination and Insurance, said NCUA examiners identify risk assessments and staff training as two top areas of compliance problems (News Now Aug. 23). On a related issue, Graham also noted that some suspicious activity monitoring programs being implemented are found to be insufficient to manage the risks involved in the credit union's business. Use the resource links below to access information on an archived version of the CUNA webinar and to read the BSA penalty release.
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