FinCEN Fines Trust Company for BSA Violations

FinCEN fined a South Dakota-chartered trust company for failing to accurately and timely report suspicious transactions in violation of the Bank Secrecy Act. This is the first ever FinCEN enforcement action involving a trust company.

As outlined in the Consent Order, the trust admitted that it willfully failed to accurately and timely report hundreds of transactions to FinCEN involving suspicious activity by its customers. FinCEN said that during various points of the relevant period, the trust relied on a manual review of daily transactions done by a single employee. Acting Director Himamauli Das said that the failures resulted in "processing over $4 billion in international wires with essentially no controls," including transactions with connections to "apparent trade-based money laundering and securities fraud schemes." According to the Order, these failures stemmed from what FinCEN characterized as a "severely underdeveloped" and "substantially inadequate" process for identifying and reporting suspicious activity.

FinCEN concluded that the trust:

• expanded into an international line of business involving customers with elevated money laundering risks without considering the resources required to (i) identify such risks and (ii) report suspicious transactions;
• maintained an inadequate manual process in light of the growing volume of transactions it was processing; and
• failed to file SARs on suspicious transactions.

The trust company agreed to (i) pay a $1,500,000 civil monetary penalty, (ii) conduct a SAR Lookback Review and (iii) undertake an AML Program Review.