Puerto Rico’s Financial Institution Security Under Fire: US Department of Treasury Slaps $15 Million Fine on Local Bank for Anti-Money Laundering Violations
The United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has taken a significant step in combating money laundering and terrorist financing in Puerto Rico. In a move that marks a new era of enforcement, FinCEN has imposed a $15 million fine on a local bank for failing to implement adequate anti-money laundering (AML) controls.
Bancrédito’s Violations
Bancrédito, the targeted bank, has admitted to violating AML regulations by:
- Failing to timely and adequately file suspicious activity reports (SARs)
- Not establishing an appropriate due diligence program for correspondent accounts for foreign financial institutions
- Failing to implement and maintain an adequate AML program
The bank’s lax approach to AML compliance placed it at risk of being used for money laundering and terrorist financing activities.
Lax Compliance
According to FinCEN, Bancrédito failed to file a single SAR on any transaction prior to 2016, despite moving large amounts of money internationally on behalf of high-risk customers, including those with ties to Venezuela. The bank also processed hundreds of millions of dollars in suspicious transactions without reporting them to the authorities.
Consequences
The fine imposed on Bancrédito is the largest ever issued by FinCEN against a Puerto Rican financial institution and sends a strong message about the importance of AML compliance.
“FinCEN’s action today demonstrates our commitment to protecting the US financial system from money laundering and terrorist financing,” said FinCEN Director, Jennifer Shasky Calvery.
Implications
The case highlights the need for financial institutions in Puerto Rico to prioritize AML compliance and ensures that the island’s banking sector is held to the same standards as those in the mainland United States.
“FinCEN will continue to work closely with regulators and law enforcement agencies to ensure that all financial institutions, regardless of their location, are adhering to the highest standards of AML compliance,” added Calvery.
Action Required
Bancrédito has agreed to surrender its license to operate in the US and preserve all business records related to BSA compliance for a period of five years. The bank’s failure to comply with AML regulations has far-reaching implications for the financial sector in Puerto Rico, highlighting the need for greater vigilance and cooperation between regulators, law enforcement agencies, and financial institutions.
Conclusion
In light of this development, it is imperative that financial institutions in Puerto Rico take immediate action to strengthen their AML controls and ensure compliance with relevant regulations. Failure to do so may result in severe consequences, including fines and reputational damage. As the global fight against money laundering and terrorist financing continues, FinCEN’s actions serve as a reminder of the critical role that financial institutions play in this effort.