Financial Crime World

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Puerto Rican Bank Hit with $15 Million Fine for Financial Crimes

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The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has imposed a significant penalty on Puerto Rican International Banking Entity Bancrédito International Bank and Trust Corporation (Bancrédito) for violating the Bank Secrecy Act (BSA).

First Enforcement Action against a Puerto Rican IBE

This enforcement action marks FinCEN’s first against a Puerto Rican IBE, also known as a “gap institution” due to its lack of a federal functional regulator. Additionally, it is notable for being the first case to involve a violation of a 2020 rule requiring gap institutions to have anti-money laundering programs in place.

Violations and Failures

According to FinCEN, Bancrédito’s violations included:

  • Willful failures to report suspicious transactions
  • Failure to implement due diligence programs for correspondent accounts
  • Lack of an adequate anti-money laundering program

The bank failed to file any suspicious activity reports (SARs) prior to 2016, despite being notified of SAR-related deficiencies by its primary regulator in 2015. Furthermore, FinCEN found that Bancrédito’s due diligence program for foreign correspondent accounts had declined substantially by the time of a 2019 examination.

Lack of an Anti-Money Laundering Program

FinCEN determined that Bancrédito did not develop or implement an anti-money laundering program as required by FinCEN’s 2020 “Gap Rule,” despite committing to do so following a 2015 examination. As a result, the bank was unable to identify and report hundreds of millions of dollars in suspicious transactions.

Penalty and Consequences

FinCEN assessed the penalty after weighing the severity, frequency, and history of the violations. The agency also required Bancrédito to:

  • Preserve all business records for five years
  • Surrender its license

The bank’s holding corporation has threatened legal action over FinCEN’s enforcement action, describing the penalty as “excessive and unprecedented.” However, FinCEN maintains that the fine is necessary to hold banks accountable for their actions and prevent future violations of financial regulations.

Conclusion

This enforcement action serves as a reminder of the importance of complying with financial regulations and the consequences of non-compliance.