Mon, Dec 8, 2014
A credit union was recently fined $300,000 for Bank Secrecy Act violations. The over $3 million Credit Union admitted it committed numerous anti-money laundering failures for several years. The violations involved transactions from known high-risk areas such as Central America, the Middle East and Mexico, according to an assessment of civil penalty filed recently by the Financial Crimes Enforcement Network.
Further investigation revealed the cooperative had contracted with a third-party vendor to provide services and sub-accounts to numerous money services businesses in locations outside its field of membership. The credit union willfully violated BSA reporting and recordkeeping requirements, including failure to comply with the USA PATRIOT Act regulations that require financial institutions to search their records to locate accounts and transactions of persons that may be involved in terrorism or money laundering, FinCEN said.
The $300,000 fine came with a warning from federal officials that risky money services business customers are flocking to smaller financial institutions because big banks have increased scrutiny. “When a small institution opens its doors to the world, takes on greater risks than it can manage, and puts profits before AML controls, bad actors are bound to take advantage,” FinCEN Director Jennifer Shasky Calvery said in a press release announcing the penalty.
Federally chartered credit unions are required to designate a person responsible for ensuring day-to-day compliance with BSA requirements, but this credit union failed to designate a person responsible to oversee BSA compliance, and no staff member was assigned or technically competent to oversee ongoing compliance efforts, FinCEN said.
“The staff did not have sufficient resources or technical expertise to administer a program capable of ensuring compliance with the BSA,” FinCEN said. “These MSBs were located outside of its geographic field of membership and were engaged in high-risk activities, such as wiring millions of dollars per month to high-risk foreign jurisdictions,” the FinCEN document said.
The credit union neglected AML compliance responsibilities and lacked sufficient staff expertise and technical infrastructure to sufficiently monitor the vendor’s contract, the agency said.
Source: Credit Union Times