We're reporting an OCC CMP for BSA/AML violations in today's Top Stories.

TCF National Bank is a moderately large institution, with 436 offices scattered through the Midwest and West, and about $18B in total assets.

According to the OCC Order, TCF was hit with a Consent order back in 2010, and had to do a look-back over about 21 months' activity to identify potentially suspicious customer activity and file any necessary SARs. Apparently, there was a lot of questionable activity in that period, because the bank made over 2,300 late SAR filings from the look-back (over 100 on average for each of the look-back months). And apparently, some of those 2,300 SAR filings may have been inadequately prepared -- A follow-up exam in November 2011 found 13 inadequately completed SARs on transactions possibly related to terrorist financing. In some of those SARs, although the narrative section made reference to possible terrorist financing, the "terrorist financing" checkbox had not be checked. In other SARs, the narrative section was considered inadequate.

I can't offer an opinion on the appropriateness of the OCC's actions, since any such enforcement action is based on a totality of events, actions, failures to act, and other information to which we aren't made privy. But this CMP does illustrate the importance in the overall scheme of things of "dotting one's I's and crossing one's T's" when completing BSA filings.

TCF agreed to re-file the 13 SARs in question, and "conduct appropriate employee training."

A post-action thought: Had the bank invested sufficient time and systems work to identify all or most of those 2,300 incidents as they occurred, rather than under the pressure of a 21-month look-back, it might have had time to have someone proofread its SARs and catch those missing checkoffs and enhance the quality of its narratives. Perhaps the key lesson from the TCF enforcement order is a reminder of the old adage that it's easier (or certainly better) to do it right the first time than to try to fix it later.

Not knowing the entire story behind the 2,300 SARs or the usual reported SAR activity at the bank. It would seem to me that they either had a large money landering issue at the bank at the time of the look back that was not reported or there may have been quite a few defensive SARs sent as part of the 2,300.

Yes, there are probably a number of SARs that would be considered defensive by many. But, whatever this bank did after the original cease and desist was not up to expectations, regardless of what those may have been. I know one bank in which the OCC has told them that any deposit involving over $10,000 in cash without an identified source of funds warrants a SAR.

Particularly with a contracted consultant working on the look-back, there will be a tendency, I imagine, for identification of a lot more potential suspect activity, and for a lot more defensive filings. Which goes back to my suggestion that, had the bank done a better job of identifying and following-up on questionable activity when it occurred, rather than during a look-back, it could have avoided the "present unpleasantness." There's no doubt in my mind that hundreds of those 2,300 SAR filings would have instead been reasonable non-filing decisions, and examiners would probably (nothing is certain, after all) been a lot more likely to have accepted well-documented decisions not to file on them.

As someone very wise once said, "Coulda, woulda, shoulda."

Is this a deficiency across the entire system or was the activity centered on a particular area's activity? For example, the branches in the Dakotas versus any of the other states?

The information available doesn't indicate if the problem was isolated to one or more locations.

I didn't dig it up, but the 2010 C&D might give some additional detail.

This is a quite a substantial penalty for a bank this size. I was actually shocked by the CMP, as the bank has made signifcant strides from 2010 starting with hiring an excellent BSA Officer.

But it is what it is. This should be a clear warning sign that the days of MRA's and promises to fix things are long gone.

Just one comment for now: if I were to file a SAR for possible terrorist financing, I would make sure it was the most complete SAR I ever prepared, and I would review it multiple times to ensure it was properly completed and all boxes checked. Not a SAR to be taken lightly.

That 2010 Order is linked on the OCC's press release, and we have it listed on our BSA/AML Penalties page.

http://www.bankersonline.com/security/bsapenaltylist.html#tcf

For a $18B bank, they appeared to have had some significant weaknesses, include what appears to be no automated monitoring software. That might explain. along with operating in a multi-state environment, why the large number of missed SARs were identified. With $1.8B in capital, a $10MM fine is not going to set them back significantly.

Agree. I have to guess -- since I wasn't a fly on the wall -- that during the look-back effort a lot of questionable activity got flagged and there may have not been time (looks like they had a 60-day window unless they obtained an extension) to adequately filter out the activity that would not have resulted in SARs if the bank had time to analyze the data. 100 SARs per average month seems pretty high, even for a bank with over 400 offices, particularly given the geographies of their offices.

And I was struck by the particular mention of the 13 terrorist-financing-related SARs that were apparently inadequately completed.

With a lookback for that size bank, staffing should have been bumped up to meet the requirement. It is a labor intensive exercise, even using as much automation as possible for the initial flagging (transactions imported into Excel/Access and queries run).

I also would imagine that anything that was borderline fiel/not file Fell on the file side. Not a time to try to justify activity that cannot be adequately explained. They had their chance at that previously.

The terrorist activity classification is an eyeopener and would get regulator blood pressure going.

I know an OCC bank a lot smaller than that, that files 600 SARs a month based on the OCC's "special" interpretations

Once on the OCC BSA train, it is hard to get off. Mention terrorists and you are under the train.

I thought we were suppose to go a further step and notify FINCEN if we truly suspected terrorist financing. I certainly would not wait for my document to go through any electronic system.