Skip to main content
Menu Icon Menu Icon

InfoBytes Blog

Financial Services Law Insights and Observations

OCC issues $6 million penalty against national bank, terminates formal agreement

Bank Regulatory Federal Issues OCC Enforcement Bank Secrecy Act Anti-Money Laundering SARs

On September 27, the OCC announced a $6 million civil money penalty against a national bank for alleged unsafe or unsound practices related to a low-document mortgage loan program offered by the bank. According to the OCC, from mid-2011 to December 2019, the bank allegedly, among other things: (i) originated numerous loans that had false or fraudulent loan applications; (ii) falsified applicants’ information on supporting loan documents; (iii) failed to make a reasonable and good faith determination of applicants’ ability to repay; (iv) failed to ensure that documents used to verify applicants’ employment, income, and assets obtained from third parties, were reasonably reliable and accurate; (v) failed to properly disclose fees to third-party mortgage brokers on loan estimates and closing disclosures; and (vi) failed to implement an adequate system of Bank Secrecy Act/anti-money laundering internal controls and failed to file Suspicious Activity Reports in a timely manner. The bank must pay a $6 million civil penalty to the U.S. Treasury Department. The OCC also terminated a 2019 formal agreement between the OCC and the bank to remediate unsafe or unsound practices and violations of law. The OCC found that the bank implemented corrective actions required by the agreement and is in compliance with the enforcement action. The OCC also noted that it is continuing “to review the conduct of institution-affiliated parties subject to OCC jurisdiction who were associated with the now-ceased [program],” and that the “work remains ongoing.”