FinCEN Assesses Civil Money Penalty Against LA-Based Precious Metals Business for AML Violations

Anti-Money Laundering FinCEN Bank Secrecy Act

On December 30, FinCEN announced a civil money penalty of $200,000 against a Los Angeles-based precious metals business – a financial institution as defined by the BSA – and its owner and compliance officer. The company and the two individuals admitted to willfully violating federal AML laws by (i) failing to adequately asses its own risk; and (ii) failing to conduct due diligence on its highest-risk customers. Specifically, the business did not have an AML program in place until 2011, five years after the IRS instructed it to establish one. In 2013, IRS examiners found that the company’s recently-established AML program did not ensure compliance with the BSA and, as a result, the company “failed to appropriately assess its money laundering to terrorist financing risks, conducted almost no due diligence on money laundering and terrorist financing, conducted almost no due diligence on many of its highest risk customers, and failed to implement effective procedures to identify red flags or to conduct inquiries when such red flags were present, among other things.” In addition to the civil money penalty, the company and the two individuals agreed that, until 2020, they would: (i) retain an auditor; (ii) provide a comprehensive annual report to FinCEN detailing the implementation of the company’s improved AML program; and (iii) annually provide FinCEN with a copy of the company’s AML training program, certifying attendance and testing results of the program.