The financial services industry has been contemplating the lack of recent enforcement actions from regulatory agencies, many wondering if the inactivity was due to the pandemic and lack of on-site examinations. Whether that is the case or not, the reprieve is now over.
On December 16, 2021, FinCEN announced an $8 million civil money penalty against CommunityBank of Texas (CBOT) for willful Bank Secrecy Act (BSA) violations and failing to maintain an effective anti-money laundering (AML) program. FinCEN assessed a $7 million penalty along with a $1 million assessment from the Office of the Comptroller of the Currency (OCC) after the office conducted an independent investigation. As of June 2020, CBOT's asset size was approximately $4 billion with 35 branches. Now is the time for community financial institutions to pay attention. We know from experience how consent order findings are used in future examinations.
The CBOT enforcement action states that the bank failed to report hundreds of suspicious transactions to FinCEN even after the bank became aware that specific customers were involved in criminal investigations. Millions of dollars in suspicious activity were not reported to FinCEN in a timely or accurate manner, including those connected to tax evasion, illegal gambling, money laundering, and other financial crimes, according to the consent order.