Bank to Pay $1.2 Billion FinCEN Penalty over BSA/AML Program
FinCEN recently announced a consent order including a civil money penalty of approximately $1.2 billion against a very large bank for BSA/AML violations including: (i) willful failure to implement and maintain certain AML program requirements; (ii) willful failure to conduct due diligence on foreign financial institution correspondent accounts; and (iii) willful failure to complete accurate and timely reports of suspicious transactions. The Bank admitted to the facts and violations in the consent order, but the consent order notes that the Bank’s admission to “willfulness” was only to the standard for willfulness in BSA civil enforcement (“either reckless disregard or willful blindness”).
The consent order found that “[t]he Bank willfully failed to implement and maintain adequate internal controls for BSA compliance, primarily due to critical deficiencies and gaps in its proprietary transaction monitoring system, which resulted in both missed and delayed detection and reporting . . . of over $5 billion of suspicious activity, with roughly $1 billion of this activity implicating national security-related and other priority illicit finance risks, including suspicious transactions indicative of Chinese Money Laundering Networks (CMLNs), fraud, and potential trade-based money laundering (TBML) with a substantial nexus to the southwest border.” The consent order covers a period from 2018 through 2025.
Among other requirements within the consent order, the Bank must hire qualified independent consultants to: (i) conduct a SAR lookback review; (ii) complete effectiveness tests on the Bank’s policies, procedures, and controls related to suspicious activity monitoring; and (iii) complete effectiveness tests on the Bank’s customer due diligence and foreign correspondent due diligence.
The Bank and the OCC separately agreed to a $750 million penalty to resolve a parallel investigation, and FinCEN credited the Bank for that payment against its total, so the Bank must pay $450 million to FinCEN. The Bank and OFAC also separately agreed to an $11 million assessment.
