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The FDIC has released a list of enforcement actions taken in October 2023. Included were three consent orders to pay civil money penalties, three consent orders to cease and desist, and two removal/prohibition orders :

• Transportation Alliance Bank (DBA TAB Bank), Ogden, Utah, was ordered to pay a civil money penalty of $315,000 for deceptive practices involving a "rebate processing fee" for early payment of certain loans.
• Paramount Bank, Hazelwood, Missouri, was assessed an $85,000 penalty for reporting inaccurate HMDA data for 2020 and 2021.
• Range Bank, Marquette, Michigan, was assessed a $4,000 civil money penalty for failing to require escrow of flood insurance premium payments on four loans on which the bank collected escrow payments for taxes and homeowner's insurance premiums.
• Herring Bank, Amarillo, Texas, was issued a cease and desist order (jointly issued with the Texas Department of Banking) due in part to weaknesses in access controls for IT and in its corporate bond accounting software.
• Royal Business Bank, Los Angeles, California, was issued a cease and desist order (issued jointly with the California Department of Financial Protection and Innovation) related to the bank's Bank Secrecy Act/Anti Money Laundering Compliance Program.
• TrustTexas Bank, SSB, Cuero, Texas, received a cease and desist order, issued jointly with the Texas Department of Savings and Mortgage Lending, for allegedly unsafe or unsound banking practices relating to interest rate risk exposure, deterioration in capital protection and earnings, and deficiencies in management and oversight by the Board.
• Brian Ferris, a former loan officer of Berkshire Bank, Pittsfield, Massachusetts, received a corrected order of prohibition relating to his alleged participation in a conspiracy to defraud the bank by submitting fraudulent loan applications to the bank that were referred to him by two co-conspirators who operated a loan brokerage business.
• Patricia Westmoreland, a former bank manager for Branch Banking and Trust Company, now known as Truist Bank, Charlotte, North Carolina, received an order of prohibition for allegedly embezzling approximately $201,000 and falsifying bank records.

FinCEN has reported its issuance, in coordination with IRS Criminal Investigation (IRS-CI), of alert FIN-2-23-Alert007 to financial institutions on fraud schemes related to the COVID-19 Employee Retention Credit (ERC). The alert provides an overview of typologies associated with ERC fraud and scams, highlights select red flags to assist financial institutions in identifying and reporting suspicious activity and reminds financial institutions of their reporting requirements under the Bank Secrecy Act (BSA).

“It is unfortunate that while the COVID-19 pandemic is behind us, fraud related to COVID-19 relief programs, like the ERC, continues to occur at a concerning scale,” said FinCEN Director Andrea Gacki. “We are issuing this alert in partnership with CI to remind financial institutions that it is critical that they remain vigilant in identifying and reporting related suspicious activity and to protect businesses from being taken advantage of by fraudsters.”

The ERC was authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act as a tax credit to encourage businesses to keep employees on payroll during the COVID-19 pandemic. CI has identified ongoing fraud and scams related to the ERC that, to date, have resulted in 323 investigations involving more than $2.8 billion of potentially fraudulent ERC claims throughout tax years 2020, 2021, 2022, and 2023. In response to the scope of the ERC fraud, in September 2023, the IRS announced an immediate moratorium through at least December 31, 2023, on processing new ERC claims in an effort to protect honest small business owners from scams.

The Department of the Treasury has announced that it has, through FinCEN, OFAC, and IRS-CI, taken unprecedented action to hold Binance Holdings Ltd. and its affiliates accountable for violations of the U.S. anti-money laundering and sanctions laws that protect American national security and the integrity of the international financial system. Binance is the world’s largest virtual currency exchange, responsible for an estimated 60% of centralized virtual currency spot trading.

Binance settled with FinCEN and OFAC for violations of the Bank Secrecy Act and apparent violations of multiple sanctions programs. The violations include failure to implement programs to prevent and report suspicious transactions with terrorists — including Hamas’ Al-Qassam Brigades, Palestinian Islamic Jihad (PIJ), Al Qaeda, and the Islamic State of Iraq and Syria (ISIS) — ransomware attackers, money launderers, and other criminals, as well as matching trades between U.S. users and those in sanctioned jurisdictions like Iran, North Korea, Syria, and the Crimea region of Ukraine. By failing to comply with AML and sanctions obligations, Binance enabled a range of illicit actors to transact freely on the platform. These settlements are part of a global agreement simultaneous with Binance’s resolution of related matters with the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC).

FinCEN's settlement agreement assesses a civil money penalty of $3.4 billion, imposes a five-year monitorship, and requires significant compliance undertakings, including to ensure Binance’s complete exit from the United States. This settlement is the largest penalty in U.S. Treasury and FinCEN history.

OFAC’s settlement agreement assesses a penalty of $968,618,825 and requires Binance to abide by a series of robust sanctions compliance obligations, including full cooperation with the monitorship overseen by FinCEN, in settlement of Binance's potential liability for 1,667,153 apparent violations of multiple OFAC-administered sanctions programs. The settlement amount reflects OFAC’s determination that the Apparent Violations were not voluntarily self-disclosed and that Binance’s conduct was egregious. The settlement amount also reflects Binance’s settlements with the Department of Justice (DOJ), the Financial Crimes Enforcement Network (FinCEN), and the Commodity Futures Trading Commission (CFTC).

To ensure that Binance fulfills the terms of its settlement — including that it does not offer services to U.S. persons — and to ensure that illicit activity is addressed, Treasury will retain access to books, records, and systems of Binance for a period of five years through a monitor. Failure to live up to these obligations could expose Binance to substantial additional penalties, including a $150 million suspended penalty, which would be collected by FinCEN if Binance fails to comply with the terms of the required compliance undertakings and monitorship. The Settlement Agreement also explicitly states that in the event OFAC determines that a material breach of, or misrepresentation in, the agreement has occurred, including due to a failure to perform the Compliance Commitments of the Settlement Agreement, OFAC may, following notice to Binance, seek to impose on Binance an additional penalty up to the statutory maximum of over $592 Billion.

As noted, OFAC took this action concurrently with DOJ, FinCEN, and the CFTC. Binance’s obligation to pay $898,618,825 of the settlement amount for its Apparent Violations will be deemed satisfied by payment to DOJ for the ITSR violations arising out of the same pattern of conduct during the same period of time.

The Justice Department announced that, as part of its plea agreement to settle criminal charges, Binance has agreed to forfeit $2,510,650,588 and to pay a criminal fine of $1,805,475,575 for a total financial penalty of $4,316,126,163. Binance separately has also reached agreements with the CFTC, FinCEN, and OFAC, and the Department will credit approximately $1.8 billion toward those resolutions.

The Federal Reserve Board has announced it has executed a consent order of prohibition against Chandlar Groce, formerly a sales and service representative at a branch of Arvest Bank (Fayetteville, Arkansas), after a finding that she made unauthorized transfers from an elderly bank customer's account to her own accounts, for her personal benefit.

FinCEN yesterday reported on its November 16 virtual FinCEN Exchange — co-hosted by OFAC and the Department of Commerce's Bureau of Industry and Security (BIS) — to discuss attempts by Russia to evade export controls. The Exchange included representatives from small- to mid-size financial institutions, law enforcement, and government agencies.

FinCEN Exchanges enhance law enforcement feedback and help financial institutions more effectively implement their anti-money laundering programs. This FinCEN Exchange exemplified the ongoing U.S. Government effort to further constrain and prevent Russia from accessing the international financial system and conduct economic activity to fund its invasion of Ukraine.

FinCEN listed information it has issued on this topic to provide red flags to assist financial institutions in identifying suspected illicit activity:

• FinCEN Alert on Increased Vigilance for Potential Russian Sanctions Evasion Attempts (March 7, 2022)
• FinCEN Alert on Real Estate, Luxury Goods, and Other High Value Assets Involving Russian Elites, Oligarchs, and their Family Members (March 16, 2022)
• First FinCEN-BIS Joint Alert Urging Increased Vigilance for Potential Russian and Belarusian Export Control Evasion Attempts (June 28, 2022)
• Financial Trend Analysis on Financial Activity by Russian Oligarchs (December 22, 2022)
• FinCEN Alert on Potential U.S. Commercial Real Estate Investments by Sanctioned Russian Elites, Oligarchs, and Their Proxies (January 25, 2023)
• FinCEN-BIS Supplemental Joint Alert Urging Continued Vigilance for Potential Russian Export Control Evasion Attempts (May 19, 2023)
• Financial Trend Analysis on Suspected Evasion of Russian Export Controls (September 8, 2023)
• FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security Notice Announcing New Reporting Key Term and Highlight Red Flags Relating to Global Evasion of U.S. Export Controls (November 6, 2023)

FinCEN continues to encourage all financial institutions to register under USA PATRIOT Act Section 314(b) and to form associations to engage in voluntary information sharing [see 31 C.F.R. 1010.540]. Section 314(b) information sharing can reveal networks of illicit activity that no single financial institution can detect alone, compounding the benefits for both the financial institution and law enforcement. In fiscal year 2023, there were more than 7,600 314(b) registered financial institutions, making extensive network analysis possible.

On Friday, the Treasury Department announced that OFAC was designating six individuals affiliated with the Iran-aligned militia group (IAMG) Kata’ib Hizballah (KH) based in Iraq. Trained, funded, and supported by Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), KH is behind a spate of recent attacks against the United States and partners in Iraq and Syria following the attacks by Hamas against Israel. The U.S. Department of State was also designating Kata’ib Sayyid al-Shuhada (KSS) and KSS leader Hashim Finyan Rahim al-Saraji. KSS, another Iraq-based IAMG that receives support from the IRGC, has planned and been involved in attacks against U.S. personnel in Iraq and Syria.

For the names and identification information of the designated parties, see the November 17, 2023, BankersOnline OFAC Update.

Yesterday, the Department of the Treasury announced that OFAC has imposed sanctions on three entities and identifying as blocked property three vessels that used Price Cap Coalition service providers while carrying Russian crude oil above the Coalition-agreed price cap. This action underscores Treasury’s commitment, alongside its international partners, to responsibly reducing oil revenues that the Russian government can use to bankroll its invasion of Ukraine.

For the names and identification information of the designated entities and vessels, see this BankersOnline OFAC Update. Look for the sanctions program tag “RUSSIA-EO14024.”

Yesterday, in cooperation with the government of Costa Rica, OFAC designated Gilbert Hernan de Los Angeles Bell Fernandez (Bell), a Costa Rican narcotics trafficker, known not only for the volume of drugs he moves but the violence with which he operates, who has played a significant role in Costa Rica’s recent transformation into a major narcotics transit hub.

For Bell's identification information, see the November 15, 2023, BankersOnline OFAC Update.

Yesterday, the Treasury Department announced that OFAC had imposed its third round of sanctions targeting Hamas-affiliated individuals and entities since the October 7 Hamas terrorist attacks on Israel. This action designated key Hamas officials and the mechanisms by which Iran provides support to Hamas and Palestinian Islamic Jihad (PIJ). Yesterday’s designations were coordinated with action by the UK and are aimed at protecting the international financial system from abuse by Hamas and their enablers. The U.S. Department of State concurrently designated a leader of PIJ’s military wing.

For the names and identification information of the designated parties, see this BankersOnline OFAC Update.

The Federal Trade Commission has announced it is now providing the ability to report fraud, scams and deceptive practices in multiple languages in addition to English and Spanish.

These new language access enhancements will allow people to file reports with the FTC in their preferred language when calling the FTC. Among the new languages available are Mandarin, Tagalog, Vietnamese, French, Arabic, Russian, Korean, Portuguese and Polish. Further details are available in an FTC Blog article. Consumers speaking English and Spanish can also continue to file reports directly online.

The FTC is also offering guidance online and in print to consumers and businesses in additional languages. This includes advice on how to spot, stop and avoid scams and what to do if you paid a scammer online, as well as offering free print resources in multiple languages.