Recently, the Board of Governors of the Federal Reserve System (“the Fed”) alleged the American arm of an international bank’s (the “Bank”) risk management program was not in compliance with laws and regulations relating to anti-money laundering and the Bank Secrecy Act. As a result, the Fed levied a $41 million civil penalty along with other compulsory reporting requirements.
The Bank adopted a firm-wide risk management program for its U.S. operations that was designed to comply with all applicable laws, rules, and regulations relating to anti-money laundering compliance, including rules promulgated by the U.S. Department of Treasury and various federal supervisors.
After a recent examination, the Fed alleged the Bank’s risk management and compliance with the above requirements were in violation of the regulatory compliance program requirement. Furthermore, alleged deficiencies in the Bank’s transaction monitoring capabilities prevented them from properly assessing risk for billions of dollars in potentially suspicious transactions.
As a result of these allegations, the Fed issued a cease and-desist-order, along with a monetary penalty. The details of the order include submitting a written plan to strengthen oversight of Bank Secrecy Act compliance, improving the Bank’s compliance risk management program, and obtaining an independent third party to conduct a comprehensive review of the Bank’s compliance programs. Additionally, the Bank must pay a $41 million civil penalty.