September 13, 2011 –
FDIC, FinCEN and OFR Assess Civil Money Penalty Against Ocean Bank

The Federal Deposit Insurance Corporation (“FDIC”), the Financial Crimes Enforcement Network (“FinCEN”) and the State of Florida, Office of Financial Regulation (“OFR”) (collectively, the “Regulators”) announced the assessment of concurrent civil money penalties of $10,900,000 (“Civil Penalty”) against Ocean Bank, Miami, Florida (“Ocean Bank”), for violations of federal and state Bank Secrecy Act (“BSA”) and anti-money laundering (“AML”) laws and regulations.

The Regulators determined that Ocean Bank failed to implement an effective BSA/AML Compliance Program with internal controls reasonably designed to detect and report money laundering and other suspicious activity in a timely manner.  Additionally, it was found that Ocean Bank failed to conduct adequate independent testing, particularly with respect to suspicious activity reporting requirements and to sufficiently staff the BSA compliance function with appropriately trained staff to ensure compliance with BSA requirements.

FinCEN noted that Ocean Bank failed to recognize and mitigate risks as well as report transaction activity often associated with money laundering involving direct foreign account relationships in high-risk jurisdictions including Venezuela.  In particular, Ocean failed to recognize, address and mitigate the risks associated with Venezuela’s parallel foreign exchange market or “permuta,” particularly transactions involving Venezuelan broker/dealers (Casa de Bolsa and Sociedad de Corretage).  Risks associated with “permuta” transactions include an inability to readily identify the true originator/beneficiary and source of funds, the use of offshore entities and shell companies to facilitate transactions as well as inherent vulnerabilities relative to money laundering and terrorist financing.  Ocean failed to routinely validate documents, companies, clients and broker/dealers involved in “permuta” transactions and adequately integrate these practices into its BSA compliance system and controls.

Finally, Ocean violated the suspicious activity reporting requirements of 31 U.S.C. § 5318(g) and 31 C.F.R. § 103.18 (31 C.F.R. § 1020.320) by failing to file hundreds of suspicious activity reports in a timely manner.  Ocean received wire transfers from Mexican Casas de Cambio that exhibited patterns commonly associated with potential money laundering and Black Market Peso Exchange (BMPE”), including the nature of the business, high-risk geographic locations of the originator and/or beneficiary, and transaction activity that lacked any business or apparent lawful purpose or was inconsistent with the normal and expected transactions for actual or similar customers.

To read a complete copy of the Civil Penalty, please click here.