Title: FinCEN Imposes $15 Million Penalty on Bancrédito International Bank for AML Program, SAR, and Correspondent Account Violations

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) assessed a $15 million penalty on Bancrédito International Bank and Trust Corporation (Bancrédito), a Puerto Rican International Banking Entity, for various violations of the Bank Secrecy Act (BSA).

Background

Bancrédito, known as a “gap institution,” had a partial exemption from the BSA’s Anti-Money Laundering (AML) program requirement prior to March 15, 2021. Although exempted, the bank was still required to comply with other BSA obligations such as reporting suspicious transactions. With the issuance of the “Gap Rule” in 2020, gap institutions were required to have AML programs in place.

Transgressions and Penalties

The penalty primarily centered around three areas: Suspicious Activity Reports (SAR), correspondent account due diligence, and AML program compliance.

SAR Reporting Violations

Bancrédito neglected to file SARs despite being aware of deficiencies and prior OCIF examinations identifying suspicious transactions failings. These lapses were particularly concerning considering the Bank served a high-risk clientele, including Venezuelan nationals, warranting increased scrutiny.

Correspondent Account Due Diligence Violations

Bancrédito’s correspondent account due diligence practices came under heavy criticism from FinCEN. Examinations revealed the Bank had let its previously adequate programs deteriorate during the 2019 examination, leading to compliance failures. Important steps such as evaluating critical information, comparing transactions against expected volumes and balances, and maintaining appropriate risk ratings were overlooked.

AML Program Violations

Post-2015 regulatory examinations highlighted the need for Bancrédito to establish and implement an AML program, as required by the BSA. However, the Bank failed to meet this obligation, resulting in non-compliance and an eventual consent order from FinCEN.

Although the penalty represents a significant fine for Bancrédito, a Puerto Rican publication reported that the holding corporation may challenge the decision, citing concerns regarding the penalty’s excessive and unprecedented nature for gap institutions.

Relevant Regulations

• 31 C.F.R. § 1023.230(a)(1) (Suspicious Activity Reports)
• 31 C.F.R. § 1011.330 et seq. (Customer Identification Program)
• 31 C.F.R. § 1020.210 et seq. (AML Program Rules)