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Financial Institution Compliance Issues Emerge in Puerto Rico
The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has taken action against a Puerto Rican international banking entity (IBE), Bancrédito International Bank and Trust Corporation, for compliance issues related to anti-money laundering (AML) regulations.
Failure to Comply with AML Regulations
On September 15, 2023, FinCEN announced a $15 million penalty against Bancrédito, citing failures in filing suspicious activity reports (SARs), establishing due diligence programs for correspondent accounts, and implementing an adequate AML program. The entity admitted to these violations in a consent order with FinCEN.
High-Risk Customers and Transactions
The issues at hand are particularly concerning given the high-risk nature of some of Bancrédito’s customer base, including those with ties to Venezuela, a jurisdiction identified as having elevated money laundering risks. FinCEN had issued two advisories warning of AML risks associated with customers and transactions connected to Venezuela, which put Bancrédito on notice.
Lack of SAR Filings
The consent order notes that prior to 2016, Bancrédito failed to file a single SAR on any transaction despite moving large amounts of money internationally on behalf of high-risk customers. FinCEN independently identified hundreds of millions of dollars in additional suspicious transactions for which Bancrédito failed to file timely SARs.
Consequences
Bancrédito is also required to surrender its license to operate in the United States and preserve all business records related to BSA compliance for a period of five years.
FinCEN’s Commitment to Enforcement
The size of the penalty reflects FinCEN’s commitment to enforcing AML regulations, as outlined in its 2020 Statement on Enforcement of the Bank Secrecy Act. The action is also consistent with FinCEN’s more recent AML and Countering the Financing of Terrorism Priorities.
Importance of Robust Compliance Programs
This development serves as a reminder of the importance of robust compliance programs for financial institutions operating in high-risk jurisdictions. As FinCEN continues to scrutinize institutions for compliance, it is crucial that they prioritize AML efforts to mitigate the risk of money laundering and other financial crimes.
Key Takeaways
- Failure to comply with AML regulations can result in significant penalties
- Financial institutions operating in high-risk jurisdictions must prioritize AML efforts
- Robust compliance programs are essential for mitigating the risk of money laundering and other financial crimes