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CMP orders for 3 Merchants Bank of California bankers

Carson, CA
Fine Amount: 
$60,000 total
Issued by: 

The OCC issued consent orders for civil money penalties to three individuals now or formerly affiliated with Merchants Bank of California, NA, Carson, California.

  • Susan Cavano, chief banking officers and former chief operating officer and senior vice president, was ordered to pay $5,000 and to cease and desist. The OCC found that Cavano caused, brought about or participated in violations of a 2010 Consent Order and a 2014 Consent Order against the bank and the bank's violations of 12 CFR §21.21 (Procedures for monitoring Bank Secrecy Act (BSA) compliance). Cavano was also found to have interfered with the bank's BSA officer's authority to determine that the bank terminate customer relationships the posed excessive BSA/AML/OFAC risk to the bank and staffing within the BSA department of the bank; and to have made false statements to the OCC and encouraged other bank employees to do the same.
  • Jane Chu, former executive vice president and chief financial officer, was ordered to pay a civil money penalty of $35,000 and to cease and desist. The OCC found that Chu simultaneously served as CFO of a company owned and controlled by the bank's chairman, president and CEO ("Company"). In that dual role, Chu facilitated transactions for the Company under an agreement between the Company and a currency dealer, whereby the Company negotiated checks through its accounts at the bank on behalf of the currency dealer, allowing the company to circumvent the bank's account opening procedures, including CIP, customer due diligence and enhanced due diligence (the bank had previously rejected the currency dealer's request to become a customer of the bank). The OCC also found that Chu made incorrect statements to the bank's independent CPA. Chu was also found to have made false entries in the bank's books, overstating income, and credited duplicate funds to three customers of the bank that were owned and controlled by bank insiders (the three customers also employed Chu or otherwise paid her to perform accounting services for them). Chu also facilitated lending relationships between bank insiders and between bank insiders and bank customers, in violations of the bank's code of ethics. This was the OCC's second enforcement action against Chu.
  • Philip Scott, chairman of the bank's board of directors, was ordered to pay a $20,000 civil money penalty. He was found by the OCC to have caused, brought about, or participated in violations of the 2010 and 2014 consent orders (see description of Susan Cavano's enforcement action, above).

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