FinCEN Imposes $15 Million Penalty on Bancrédito for AML Violations: First Penalty Against a Puerto Rican IBE
WASHINGTON D.C. - The Financial Crimes Enforcement Network (FinCEN) imposed a $15 million civil penalty on Bancrédito International Bank and Trust Corporation (Bancrédito), the oldest and largest International Banking Entity (IBE) in Puerto Rico, for willful violations of the Bank Secrecy Act (BSA) and its regulations. This is the first penalty against a Puerto Rican IBE, marking a significant milestone in FinCEN’s efforts to combat money laundering.
FinCEN’s Action Against Bancrédito
According to FinCEN Director Andrea Gacki’s statement, Bancrédito:
- Processed millions of dollars in suspicious transactions through the U.S. on behalf of high-risk customers and foreign financial institutions without adequate due diligence and reporting.
- Failed to establish and maintain an Anti-Money Laundering (AML) program under the “Gap Rule.”
The penalty is an attempt to send a strong message that money laundering through Puerto Rican IBEs will not be tolerated.
Violations of the Bank Secrecy Act
During the period from October 2015 to May 2022, Bancrédito admitted to the following violations of the Bank Secrecy Act:
- Failure to report suspicious transactions to FinCEN.
- Establishing due diligence programs for correspondent accounts.
- Implementing and maintaining an AML program as required for IBEs.
These lapses caused significant losses for law enforcement and national security. For instance, thousands of Suspicious Activity Reports (SARs), a critical financial intelligence in combating money laundering and safeguarding the financial system, were left unfiled for years. The transactions of concern involved a Bancrédito executive and customers from high-risk jurisdictions, like Venezuela, which were implicated in foreign bribery and money laundering.
Lack of Oversight on Correspondent Accounts
Bancrédito also fell short of establishing a due diligence program for correspondent accounts held by foreign financial institutions. This oversight meant almost unrestricted access to funds through the U.S. financial system, posing serious implications and jeopardizing the integrity of the U.S. financial system.
Neglect of AML Program
Moreover, Bancrédito failed to implement and maintain an AML program as required for IBEs since March 15, 2021. AML programs play an essential role in preventing U.S. financial institutions from being used in money laundering and other financial crimes.
Puerto Rico Office of the Commissioner of Financial Institutions Cooperation
The Puerto Rico Office of the Commissioner of Financial Institutions (OCIF) collaborated with FinCEN to address Bancrédito’s violations. OCIF’s assistance was crucial in resolving the issues.
The Importance of AML Compliance
As per the 2022 National Money Laundering Risk Assessment published by the U.S. Department of the Treasury, IBEs are considered to be at high risk of money laundering in Puerto Rico. This investigation serves as a reminder that strong AML compliance is essential for all financial institutions.
For more information about the specific BSA violations and their underlying causes, see the Consent Order between FinCEN and Bancrédito.