PUERTO RICO FINANCIAL CRIMES: TREASURY DEPARTMENT IMPOSES $15 MILLION FINE ON BANK FOR VIOLATIONS OF BANK SECRECY ACT

Major Enforcement Action Against Puerto Rican International Banking Entity

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has imposed a $15 million civil money penalty against Bancrédito International Bank and Trust Corporation, a Puerto Rican international banking entity.

Violations of Bank Secrecy Act (BSA)

According to FinCEN, Bancrédito violated multiple provisions of the Bank Secrecy Act (BSA), including:

• Failing to report suspicious transactions
• Not implementing an adequate anti-money laundering program
• Failing to maintain proper due diligence for correspondent accounts

These violations occurred between October 2015 and May 2022.

First Enforcement Action Against a Puerto Rican International Banking Entity

This penalty marks FinCEN’s first enforcement action against a Puerto Rican international banking entity, also known as a “gap institution” due to its lack of a federal functional regulator. Additionally, this is FinCEN’s first enforcement action involving a violation of the 2020 rule requiring gap institutions to have an anti-money laundering program in place by March 2021.

Failure to Report Suspicious Activity Reports (SARs)

FinCEN found that Bancrédito failed to file any suspicious activity reports (SARs) prior to 2016, despite being notified of SAR-related deficiencies by its primary regulator, the Puerto Rico Office of the Commissioner of Financial Institutions. The bank also failed to implement an effective transaction monitoring and detection process, resulting in hundreds of millions of dollars in suspicious transactions going unreported.

Correspondent Account Due Diligence Program

In addition, FinCEN found that Bancrédito’s correspondent account due diligence program had declined substantially by 2019, resulting in failures to collect critical information from counterparties and report suspicious activity. The bank also failed to develop and implement an anti-money laundering program as required by the 2020 “Gap Rule”.

Order to Preserve Records and Surrender License

FinCEN has ordered Bancrédito to preserve all business records for a period of five years and surrender its license.

Criticism from Bancrédito Holding Corporation

The enforcement action was met with criticism from the Bancrédito Holding Corporation, which threatened legal action against FinCEN, calling the penalty amount “excessive and unprecedented”.