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Financial Institution Risk Assessment: Fine Imposed on Puerto Rican Bank for AML Compliance Violations
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has taken its first enforcement action against a Puerto Rican international banking entity (IBE) for anti-money laundering (AML) compliance program deficiencies. The agency announced a $15 million civil monetary penalty against Bancrédito International Bank and Trust Corporation, a leading IBE in Puerto Rico.
Background
According to FinCEN’s Consent Order, Bancrédito admitted to failing to timely report suspicious transactions to the agency with Suspicious Activity Reports (SARs), maintaining an inadequate due diligence program for correspondent accounts, and lacking an adequate AML program. The bank also failed to adequately account for risks associated with customers connected to high-risk jurisdictions like Venezuela.
Enforcement Action
The Consent Order noted that FinCEN independently identified hundreds of millions of dollars in additional suspicious transactions on which Bancrédito failed to file timely SARs. The agency also identified tens of thousands of transactions by high-risk accountholders processed through the bank’s foreign correspondent accounts, representing hundreds of millions of dollars.
Factors Contributing to the Size of the Penalty
FinCEN’s penalty against Bancrédito was determined by several factors, including:
- Recidivist behavior
- Failure to adequately address AML risks
- Extent of compliance deficiencies
The agency’s 2020 Statement on Enforcement of the Bank Secrecy Act outlines the factors considered in determining the size of penalties.
Implications for the Financial Industry
The FinCEN action against Bancrédito serves as a reminder to financial institutions to prioritize AML compliance and risk assessment. The incident highlights the importance of robust BSA compliance, particularly for institutions operating in high-risk jurisdictions.
Institutions lacking a federal functional regulator, such as:
- State-chartered banks
- Non-depository trust companies
- Non-federally insured credit unions
- Some international banking entities
must ensure that they have adequate AML programs in place to mitigate the risk of money laundering and terrorist financing.
Conclusion
The FinCEN action against Bancrédito is a significant reminder of the importance of AML compliance for financial institutions. The agency’s efforts to address AML issues in the industry are crucial to preventing money laundering and terrorist financing. As the financial industry continues to evolve, it is essential that institutions prioritize AML compliance and risk assessment to maintain trust and stability in the global financial system.