September 25, 2013 –
$4.1M penalty evidence of FinCEN’s zero tolerance on BSA/AML deficiencies

Yesterday, the Financial Crimes Enforcement Network (“FinCEN”) announced the assessment of a $4.1 million civil money penalty against Saddle River Valley Bank in Saddle River, New Jersey (“Bank”).

Working with the Office of the Comptroller of the Currency (OCC) and the U.S. Attorney’s Office for the District of New Jersey, FinCEN concluded that the bank willfully violated aspects of the Bank Secrecy Act, including the BSA’s program, recordkeeping, and reporting requirements. Specifically, the Bank:

1. lacked an effective anti-money laundering (AML) program reasonably designed to manage the risks of money laundering and other illicit activity;
2. failed to conduct adequate due diligence on foreign correspondent accounts; and
3. failed to detect and adequately report in a timely manner suspicious activities in the accounts of foreign money exchange houses, also known as casas de cambio.

Significantly, the Bank executed $1.5 billion worth of inadequately monitored transactions on behalf of Mexican and Dominican casas de cambio despite publicly available information, such as a FinCEN advisory, that provided ample notice of the heightened risks of dealing with these institutions.

FinCEN’s penalty is concurrent with a $4.1 million civil money penalty assessed by the OCC, and will be satisfied by one payment of $4.1 million to the U.S. Department of the Treasury. In addition, the U.S. Attorney’s Office for the District of New Jersey will collect $4.1 million from the bank through civil asset forfeiture.

The penalty against the Bank, as well as the $37.5 million civil money penalty imposed by FinCEN against TD Bank, N.A. on September 23, 2013, demonstrates FinCEN’s hard-line, zero-tolerance approach toward BSA/AML deficiencies. As such, banks and other financial institutions subject to BSA/AML requirements should continually ensure that their BSA/AML compliance programs and procedures are both adequate and effective.

For more information on the foregoing, or specifically with respect to BSA/AML compliance, please contact Andy Fernandez, Gabriel Caballero or Stephanie Quinones.