Bank Disciplined for Unsound AML/OFAC Practices

A state chartered bank offering payment processing services to financial technology companies settled Federal Reserve Board ("FRB") charges for deficiencies in anti-money laundering risk management and consumer compliance risk management.

In the Consent Order, the FRB described deficiencies that arose from a consumer compliance examination and a safety and soundness examination which uncovered inadequate compliance with, among others, the Bank Secrecy Act, AML requirements and OFAC regulations. 

In the settlement, the FRB required a host of remedial steps the Bank must take in order to strengthen board oversight of its management and operations and ensure compliance with BSA/AML requirements and OFAC regulations. These include, but are not limited to: (i) improving lending and credit risk management policies and procedures; (ii) enhancing interest rate risk management practices that are appropriate for the size and complexity of the Bank; (iii) correcting the discovered information technology and information security deficiencies; (iv) submitting an enhanced written internal audit program; (v) retaining an independent consultant to review and strengthen the Bank’s program for compliance with the BSA/AML requirements; (vi) submitting a written customer due diligence program; (vii) engaging an independent consultant to review and improve the Bank's transaction monitoring system; (viii) providing a written program on suspicious activity monitoring and reporting; and (ix) providing a further plan to address the Bank's compliance with the OFAC regulations. In addition, the FRB placed strict limitations on certain business activities.