NEWS: This heading should have caught your attention on a Monday morning.
The Financial Crimes Enforcement Network (FinCEN) has the authority to investigate and impose civil money penalties on financial institutions that willfully violate the Bank Secrecy Act (BSA) and individuals who willfully participate in such violations. Last week, FinCEN announced a $100,000 civil money penalty against a former New York credit union employee (Asre) for willful violations of the BSA. The former employee is also banned from participating, directly or indirectly, in any financial institution’s affairs for five years. He could also face up to ten years in prison.
According to court documents, the individual was a member of the credit union’s supervisory board, claimed to be a certified anti-money laundering specialist who was trained in anti-money laundering compliance and represented to the credit union that he would conduct appropriate anti-money laundering oversight as required by the BSA. Instead, he failed to register his money service business with FinCEN, failed to maintain an effective anti-money laundering (AML) program and failed to detect and report suspicious transactions.
“Asre allowed millions of dollars in high-risk transactions to be processed without required anti-money laundering controls or reporting to FinCEN,” said FinCEN Director Andrea Gacki. “Today’s action serves as a reminder that FinCEN will not hesitate to take action against individuals when their conduct jeopardizes the integrity of our financial system.”
As part of the BSA Compliance Officer’s job duties, he was responsible for assessing the AML risks posed by the credit union’s members and services. The former employee drafted a risk assessment, but the risk assessment improperly concluded that the credit union operated at a low level of risk, “the risk assessment failed to risk rate any of the Credit Union’s identified service offerings, failed to provide any explanation of how risks were calculated, failed to provide any details of how the identified risks would be mitigated, and failed to establish a protocol for identifying and reporting unusual, unexplained, and/or suspicious activity.” In addition, the credit union never filed a suspicious activity report while this individual was the BSA Compliance Officer and there was no formal BSA training provided to any of the credit union’s staff. As a result of the inadequate AML monitoring procedures that the BSA Officer oversaw, hundreds of millions of dollars in high-risk funds moved through the Credit Union without any proper monitoring.
VIOLATIONS
Asre, as an employee of financial institutions subject to the BSA, willfully violated, or willfully participated in violating, the BSA and its implementing regulations. Specifically, FinCEN has determined that Asre is liable for the following violations of the BSA:
- Willfully failing to register DDH as an MSB with FinCEN, in violation of 31 U.S.C. § 5330 and 31 C.F.R. § 1022.380 from October 21, 2015, to November 14, 2016;
- Willfully participating in NYSEFCU’s failure to implement and maintain an effective AML program for in violation of 31 U.S.C. § 5318(h)(1) and 31 C.F.R. § 1020.210 from September 1, 2015, to April 2, 2016; and
- Willfully participating in NYSEFCU’s failure to file SARs, in violation of 31 U.S.C. § 5318(g) and 31 C.F.R. § 1020.320 from September 1, 2015, to April 2, 2016.
This small credit union served primarily New York state public employees and allowed this individual to conduct high-risk transactions through the credit union. As a result of an inadequate AML program, law enforcement was deprived of key information concerning the movement of hundreds of millions of dollars in suspicious funds through the U.S. financial system. Ultimately, the BSA Compliance Officer’s actions or inactions, and the resulting BSA violations were a major contributing factor to the dissolution of the credit union.
For additional information on the Bank Secrecy Act see The League’s ii Release No. 0071.