BSA: FRB Enforces BSA

FinCEN isn't the only agency taking aggressive action to enforce the Bank Secrecy Act. The Federal Reserve recently announced two enforcement actions involving violations of BSA. The Bank of the Orient, in San Francisco, has been cited for violations of BSA. The Order requires the bank to retain a consultant to conduct an independent review of the bank's BSA program. The review must include a forensic audit of private banking and selected correspondent accounts, looking for failures to file CTRs and to identify suspicious activity. The bank is also required to implement a BSA compliance program. The program must specifically include written procedures for wire transfers and due diligence on customers using a risk-based approach. The program should specify several core elements of a BSA program including documentation standards for evaluating customers and standards for determining when activity may be suspicious.

In another action, the Board named Pedro Cabrera and required his full compliance with Bank Secrecy laws and the compliance procedures of institution for which he works or with which he is affiliated. The order is based on a finding of structuring cash and monetary instrument deposits made by private banking customers through Cabrera. Cabrera was an employee and an affiliated person of Banco Mercantil of New York and Venezuela.

Copyright © 2002 Compliance Action. Originally appeared in Compliance Action, Vol. 7, No. 6, 5/02