Extract from FinCEN (summary):
CIVIL MONEY PENALTY
FinCEN has determined that by failing (1) to establish and implement an adequate AML program, (2) to file timely, accurate, and complete SARs, and (3) to file accurate and complete CTRs as described in Section III, above, Riggs willfully violated the AML program, SAR, and CTR provisions of the BSA and a civil money penalty is due pursuant to 31 USC §5321 and 31 CFR §103.57(f). In light of the seriousness of the violations, their continuing and ongoing nature, the potential harm they pose to the public, and taking into account the financial resources of Riggs, FinCEN has determined that the appropriate penalty amount in this matter is $25 million.
A. Summary of Violations
FinCEN has determined that Riggs willfully violated the suspicious activity and currency transaction reporting requirements of the BSA and its implementing regulations, and that Riggs has willfully violated the anti-money laundering program (“AML program”) requirement of the BSA and its implementing regulations. The violations Riggs engaged in were systemic – Riggs was deficient in designing a program tailored to the risks of its business that would ensure appropriate reporting, implementing the procedures it did have, and responding to classic “red flags” of suspicious conduct.
Riggs failed to correct the violations and implement an adequate BSA program in a timely manner. Consequently, on July 16, 2003, the OCC entered into a comprehensive Consent Order with Riggs to correct the deficiencies and referred the BSA violations to FinCEN for a determination of whether a civil penalty was warranted. Since then,
however, additional violations occurred and the OCC is concurrently issuing a supplemental Consent Order requiring additional corrective actions.
B. Violations of the Anti-Money Laundering Program Requirements
FinCEN has determined that Riggs has been in violation of the AML program requirements of the BSA. As of April 24, 2002, the BSA has required banks to establish an AML program to guard against money laundering. A bank regulated by a Federal functional regulator is deemed to have satisfied the requirements of 31 USC §5318(h)(1) if it implements and maintains an AML program that complies with the regulation of its Federal functional regulator governing such programs. 31 CFR §103.120. Since January 27, 1987, the OCC has required each bank under its supervision to establish and maintain a BSA compliance program that, at a minimum: (a) provides for a system of internal controls to ensure ongoing compliance; (b) provides for independent testing for compliance conducted by bank personnel or an outside party; (c) designates an individual or individuals responsible for coordinating and monitoring day-to-day compliance; and (d) provides training for appropriate personnel. 12 CFR §21.21(c).
C. Violations of the SAR Requirements
FinCEN has determined that from 2000 through 2003, Riggs violated the SAR requirements of the BSA set forth in 31 USC §5318(g) and 31 CFR §103.18 by failing to file or by delinquently filing approximately 33 SARs. These 33 SARs represent at least $98 million in suspicious transactions.
D. Violations of the CTR Requirements
FinCEN has determined that Riggs violated the BSA currency transaction reporting requirements set forth at 31 CFR §103.27(d) by failing to provide accurate information or omitting information on numerous currency transaction reports (“CTRs”). Under the BSA, banks are required to file CTRs for transactions in currency greater than $10,000 in a single day. 31 USC §5313 and 31 CFR §103.22. Banks are required to file CTRs in the form prescribed by the Secretary of the Treasury and provide all the information called for by the form. 31 CFR §103.27(d).
E. Willful Nature of BSA Violations
FinCEN has determined that Riggs’ violations of the BSA and its implementing regulations were willful. The conduct of a bank may be characterized as willful if it demonstrates a reckless disregard for its obligations under law or regulation. As an OCC-supervised bank, Riggs was aware of the AML program, SAR, and CTR requirements of the BSA and its implementing regulations. Riggs’ failure to establish and implement a BSA/AML program adequate to meet its suspicious activity and currency transaction reporting requirements constitute systemic violations demonstrating a reckless disregard of its obligations under the BSA.