Lone Star National Bank, Pharr, Texas
$1M CMP Lone Star National Bank
The Office of the Comptroller of the Currency (OCC) on April 4, 2015, issued a Consent Order for a $1 million Civil Money Penalty against Lone Star National Bank, Pharr, Texas, for violating the Bank Secrecy Act (BSA). Lone Star is a $2.2 billion total asset national bank with 30 offices in Texas. The OCC has identified BSA/AML deficiencies with the Bank's internal controls, independent audit, suspicious activity reporting, and foreign correspondent banking program. On July 9, 2012, the Bank entered into a Consent Order ("Consent Order") with the OCC, which required the Bank to undertake remedial actions with respect to its BSA/AML program. In the March 31, 2015, Order, the OCC stated that it finds that:
- Prior to 2010, the OCC found weaknesses and issued Matters Requiring Attention related to the Bank's BSA/AML program.
- In October 2011, the OCC identified a number of significant deficiencies with the Bank's BSA/AML functions, resulting in a violation of 12 C.F.R. § 21.21. Specifically, the OCC found that two of the four minimum elements for the BSA program were not satisfied. The OCC noted critical deficiencies related to the Bank's internal controls, finding that the Bank's customer due diligence (“CDD”) and enhanced due diligence (“EDD”) for high-risk accounts was unsatisfactory. Further, the OCC determined that the Bank's independent testing was ineffective.
- In addition, the OCC found critical deficiencies with suspicious activity identification, monitoring, and reporting, resulting in a violation of 12 C.F.R § 21.11. During transaction testing, examiners noted that Suspicious Activity Reports (“SARs”) were untimely filed.
- Moreover, the OCC found a number of deficiencies with the Bank's foreign correspondent relationship, resulting in a violation of 31 C.F.R. § 1010.610.
- On July 9, 2012, the Bank entered into the Consent Order with the OCC to address weaknesses with the Bank's BSA/AML compliance program, including the failure to collect and analyze sufficient CDD and EDD, failure to file SARs, and an ineffective BSA/AML/ Office of Foreign Assets Control Act audit.
- The Consent Order required the Bank to perform a review of account and transaction activity to determine whether suspicious activity reporting was timely in accordance with 12 C.F.R. § 21.11. After conducting a look back, the Bank filed 3 new SARs, 11 late SARs, and 16 supplemental SARs.
- In November 2014, the Bank completed an additional look back review, which resulted in the filing of 157 new SARs.
- In October 2014, the OCC conducted an examination to assess the Bank's progress in addressing the non-compliant articles of the Consent Order. As with the prior examinations, the OCC found that the Bank had not achieved full compliance with the Consent Order.