FDIC and California Department of Business Oversight Levy $140 Million Penalty Against California Bank for Ongoing BSA/AML Deficiencies

FDIC Anti-Money Laundering Bank Secrecy Act Enforcement

On July 22, the FDIC, along with the Commissioner of the California Department of Business Oversight (“DBO”), announced the assessment of a $140 million civil money penalty against a California state-chartered bank to resolve allegations that it failed to implement and maintain an adequate BSA/AML Compliance Program over an extended period of time. In 2012, the bank entered a consent order with the FDIC and the DBO (fka California Department of Financial Institutions), requiring that it “address the weaknesses and correct deficiencies” in its BSA and AML programs. According to the DBO, the bank has since failed to implement the corrective actions stipulated in the consent order, which required the bank to, among other things, (i) establish internal controls to “detect and report illicit financial transactions and other suspicious activities”; (ii) hire a qualified BSA officer and sufficient staff; (iii) provide adequate BSA training; and (iv) conduct effective independent testing. Additionally, since the 2012 consent order, the DBO and FDIC have discovered “new, substantial violations of the BSA and anti-money laundering mandates over an extended period of time.” Under terms of the joint order, the bank will pay $40 million to the DBO and $100 million to the Department of the Treasury to satisfy the full $140 million penalty.