Bank Settles OCC Charges for AML Violations

The Office of the Comptroller of the Currency ("OCC") imposed a civil monetary penalty against a bank for failing to establish safe and sound practices with respect to its anti-money laundering ("AML") operational framework and its "heightened standards" obligations.

In the Consent Order, the OCC found that the bank engaged in unsound practices with respect to its operational risk management, including internal controls and compliance risk management (regulated under the Bank Secrecy Act ("BSA") /AML and fair lending), along with strategic risk management and investment management practices. Specifically, the OCC found that the bank engaged in violations of OCC Rule 9.12 ("Self-dealing and conflicts of interest"), policies and procedures and audits of fiduciary activities OCC Rule 9.5 ("Policies and procedures"), and OCC Rule 9.9 ("Audit of fiduciary activities"); BSA 3 and its implementing regulations, (12 CFR 21.11(d) ("Reports of Suspicious Activities"); 12 CFR 21.21(d)(1) ("Procedures for Monitoring Bank Secrecy Act Compliance")); and (31 CFR 1020.210(a)(2)(v) ("Anti-money laundering program requirements for banks").

In the Consent Order, the bank agreed to adopt a variety of specific improvements to its procedures, primarily related to systemic deficiencies in the bank’s AML compliance procedures. As part of the settlement, the OCC ordered the bank to take corrective actions in the following three areas relating to BSA/AML and Office of Foreign Assets Control ("OFAC"):

• BSA/AML Internal controls (including specific measures such as detailed documentation of personnel roles, appropriate threshold setting in automated monitoring systems, independent validation of monitoring systems, and ensuring accurate and timely filing of relevant reports​​);
• BSA/AML and OFAC Risk Assessments (including the development and annual updates of written, comprehensive risk assessment methodologies); and
• BSA/AML Customer Due Diligence (including, among other things, implementation of a comprehensive "Know Your Customer" standard and the development of a program for categorizing customers based on risk level).

The bank also agreed to establish a Fair Lending Risk Management Program, a Risk Governance Framework, an Investment Management Governance Program, a Staffing Program and a Strategic Plan, and to strengthen its Internal Audit Function. The bank was required to appoint a Compliance Committee of the Board of Directors, made up of a majority of Directors who are not affiliated with the bank or with the bank's affiliates.

In addition to the commitment to undertake these actions, the OCC imposed a fine of $65 million.