Transcript AMLA_Penalties

CIVIL AND CRIMINAL PENALTIES FOR MONEY
LAUNDERING AND BSA VIOLATIONS
 Money Laundering
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20 years in prison
$500,000 fine
Forfeiture of property including bank accounts
 Willful Violation of the BSA by bank employee
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5 years in prison
$250,000 fine
 A Bank Violating certain provisions of BSA
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$1M or twice the value of the transaction
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REPERCUSSIONS OF FAILING TO COMPLY
WITH THE BSA AND AML LAWS
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Regulatory enforcement actions
Severe monetary penalties
Criminal indictment of banks and bankers
Forfeiture of funds
Personal responsibility of Management and Board of Directors
Reputational Damage
Death Penalty = Cancellation of banking license
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REGULATORY ENFORCEMENT ACTIONS
2008-2009
 27 Cease and Desist Orders
 Penalties = $10,500 - $25M
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SEVERE MONETARY PENALTIES
 Doha Bank, NY Branch
• April 2009
• $5M
• No SAR monitoring/reporting/no indep. testing
• Failed to conduct DD on foreign correspondents
 United Bank for Africa, New York
• April 2008
• $15 CMP
• Previous C&D and CMP
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CRIMINAL INDICTMENT
 Bank of New York
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1999
Lucy Edwards, Vice President
$7B laundered through accounts from Russia
5 yrs sentence – 6 months house arrest
BoNY - $12M comp damages; $26M fine
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FORFEITURE OF FUNDS
 Sigue Corporation (MSB)
• Jan. 2008
• $15M CMP/Forfeiture
• U/C Operation – Drug Money Laundering
 Union Bank
• Sept. 2007
• $10CMP/$21.6M Forfeiture
• Failed to comply with MOU, failed to file SARs, inadequate
training, ineffective oversight
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PERSONAL RESPONSIBILITY/REPUTATIONAL
DAMAGE
Sykesville Federal Savings Assoc.
• Feb. 2009
• $10.5K CMP
o Chairman - $2,000
o Director and Former Pres. - $1,500
o 7 Directors and Former Directors - $1,000
• President Removed
• Failed to comply with previous C&D
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Common Deficiencies Causing Enforcement Actions
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Inadequate BSA/AML Program (policy, procedures and systems)
Inadequate BSA/AML Compliance Staff/Inadequate Resources
Lack of BSA/AML Compliance Committee
Inadequate Senior Mgmt/Board of Director Oversight
Inadequate CDD/KYC
Deficient SAR reporting
Inadequate training
Inadequate independent testing
Failure to maintain accurate and complete books/records
Failure to correct previously identified BSA/AML
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How to Fix Deficiencies
 Address Deficiencies listed in Internal and External
Exams
 Corrective Plan addressing Specific Deficiencies and
Systemic Issues
 Frequent Communication with Examiners
 Document Action Taken/Results
 Throwing money and people at the problem is not
adequate
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WHAT IF PENALTY TRAIN IS HEADING DOWN
TRACKS?
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Notify Superiors/Board of Directors
Engage Corporate Counsel
Consider outside consultant/counsel
Damage Control
Document, document, document
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