Jun 29 2009 Brett Wolf
The Federal Deposit Insurance Corporation has issued cease-and-desist orders to two banks with alleged anti-money laundering weaknesses. The order against Georgia-based Crescent Bank and Trust Company focused on equity capital and liquidity issues with Bank Secrecy Act issues playing second fiddle, but that against Tennessee-based Coffee County Bank was BSA-centric.
The order against Coffee County Bank accuses it of operating with an "ineffective" BSA/AML compliance program. It similarly describes the bank's internal controls, BSA officer, and due diligence program. It adds that the bank's board of directors "failed to provide adequate supervision" over management "to prevent unsafe or unsound banking practices and violations of laws or regulations related to the BSA".
The FDIC obliges the bank to take remedial action to correct these shortcomings. In regard to the improving internal controls, it makes a number a number of specific demands. The controls must require the bank to do the following:
• Aggregate all cash transactions and identify reportable transactions at a point where all of the information necessary to properly complete the required reporting forms can be obtained;
• Monitor, identify, and report possible money laundering or unusual and suspicious activity. Procedures should provide that high-risk accounts, services, and transactions are regularly reviewed for suspicious activity;
• Ensure that all required reports, including suspicious activity reports, currency transaction reports, and monetary instrument logs, are completed accurately and properly filed within required time frames;
• Ensure that customer exemptions to the CTR filing requirements are properly granted, recorded, and reviewed by the BSA compliance officer. Exempt accounts must be reviewed at least annually to ensure that the exemptions are still valid and to determine if any suspicious or unusual activity is occurring in the account. The results of that review should be documented in the files;
• Ensure that all information sharing requests issued under section 314(a) of the USA PATRIOT Act are checked against all areas in the bank subject to such review, including customer and non-customer transactions, in accordance with FinCEN guidelines and are fully completed within mandated time constraints;
• Ensure that procedures provide for an adequate customer due diligence program in relation to the risk levels of customers and account types. The information gathered pursuant to the CDD should assist management in predicting the types, dollar volume, and transaction volume the customer is likely to conduct, thereby providing a means to identify unusual or suspicious transactions for that customer;
• Establish procedures for screening accounts and transactions for Office of Foreign Assets Control compliance that include guidelines for responding to identified matches and reporting those to OFAC;
• Provide for adequate supervision of employees who process currency transactions, complete reports, grant exemptions, open new customer accounts, or engage in any other activity covered by the Financial Recordkeeping and Reporting of Currency and Foreign Transactions Regulations at 31 CFR Part 103; and
• Establish dual controls and provide for separation of duties. Employees who complete the reporting forms should not be responsible for filing them or for granting customer exemptions.
The order adds that CCB must hire an independent consultant to review and test its revamped BSA/AML compliance program.
Crescent Bank and Trust Company
The FDIC order targeting Crescent Bank and Trust Company simply states that the bank must correct the BSA compliance program deficiencies cited in its report of examination. The order outlines neither the specific alleged failures nor the required remedial measures.
