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Liquidated CU hit with $500K FinCEN penalty

Bronx, NY
12/15/2016
Fine Amount: 
$500,000
Issued by: 

The Financial Crimes Enforcement Network (FinCEN) has announced its assessment of a $500,000 civil money penalty against Bethex Federal Credit Union, Bronx, New York, for significant violations of anti-money laundering (AML) regulations. Bethex was liquidated by the NCUA in 2015 as insolvent with no prospects of returning to viability. FinCEN's assessments is a claim against any assets remaining after the completion of the liquidation process.

Said FinCEN, "in 2011, Bethex began providing banking services to many wholesale, commercial money services businesses (MSBs). Many of these MSBs were located in high-risk jurisdictions outside New York and engaged in high-risk activity, including wiring millions of dollars per month to countries at risk for money laundering. When Bethex began to service these MSBs, it did not take steps to update its AML programs. As a result, Bethex was unable to adequately monitor, detect, and report suspicious activity or mitigate the associated risks, leaving the credit union particularly vulnerable to money laundering.

"Among other violations, Bethex failed to timely detect and report suspicious activity to FinCEN and did not file any Suspicious Activity Reports (SARs) from 2008 through 2011. In 2013, as a result of a mandated review of previous transactions, it late-filed 28 SARs. The majority of the suspicious activity involved high-volume, large amount transfers outside of Bethex’s expected customer base by MSBs capable of exploiting Bethex’s AML weaknesses. Most of those SARs were inadequate and contained short, vague narratives encompassing a broad summary of multiple and unrelated instances of suspicious activity. For example, one SAR covered over $906 million in total aggregate of suspicious transactions, but provided little information useful to law enforcement investigators."

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