The Office of Comptroller of the Currency and the Financial Crimes Enforcement Network on Thursday issued a $7 million civil money penalty against Pacific National Bank of Miami for Bank Secrecy Act violations and failing to comply with a previous regulatory order.
The agencies said the bank failed to adequately identify, monitor and report suspicious activities and conducted an inadequate audit of its high risk activities, including its relationships with foreign correspondent banks. The fine comes after the regulators found that the $358-million asset bank failed to comply with an OCC order in 2005.
"Banks must devote appropriate resources commensurate with their risk profile and must take prompt and necessary steps to comply with the OCC enforcement actions to ensure compliance with the Bank Secrecy Act and the USA Patriot Act," Acting Comptroller of the Currency John Walsh, said in a press release.
Following the 2005 OCC consent order, Fincen notified the bank about potential deficits in its BSA and SAR reporting. During an examination in March 2009, the OCC found that the bank continued to not comply with the 2005 order and establish proper BSA procedures.
Fincen said in its order that the bank's internal controls suffered from longstanding systemic deficiencies and the scope and frequency of the independent testing for BSA compliance was not conducted in a timely manner to correct violations. Regulators also found that the bank did not complete due diligence for customers, including more than half of its direct clients in Ecuador.
"Financial institutions choose their customer base and the geographic areas they wish to serve; those choices drive their regulatory compliance obligations," Fincen Director James Freis, said in a press release. "Regulators must coordinate efforts, as in this case of concurrent actions by Fincen and the OCC, to address compliance deficiencies and delayed and incomplete reporting pursuant to the BSA."
Regulators also said that the bank did not properly monitor systems for reporting suspicious activity. Pacific failed to monitor transactions, despite repeated warnings from OCC and Fincen, about heightened money laundering risk of certain customers, products and locations, Fincen said. For example, the bank filed SARs late and with blank or incomplete fields.