FDIC: Illinois Bank Enters Stipulation and Consent Order over Alleged BSA Violations

In November 2019, an Insured State Nonmember Bank operating in Illinois agreed to a consent order with the FDIC and the Illinois Department of Financial and Professional Regulation, Division of Banking, in connection with allegations that the Bank failed to comply with the BSA.  Importantly, the Order does not admit fault by the Bank to the allegations raised by the regulatory institutions.  The Order provides that the Bank must implement a fully compliant BSA compliance program, provide notifications to shareholders, and produce progress reports to the FDIC and Illinois Division of Banking under various time deadlines.

As part of the BSA compliance program, the Bank must implement new written policies, internal controls, guidelines, and due diligence practices within 90 days of the Order.  The Due Diligence program must be able to provide a risk rating for the Bank’s customers related to money laundering or other unlawful activities, provide the means to obtain and analyze the risks presented by the persons identified by the program, and provide guidelines that “reasonably ensure the identification and timely, accurate reporting of known or suspected criminal activity.”  The Order provides for continued inspections of the Bank by the FDIC and Illinois Division of Banking to determine the Due Diligence program’s compliance with the BSA and Order.

New staff are also required to be added by the Order, including management with the proper qualifications to oversee the BSA compliance program.  Under the Order, staff must be trained through a BSA training program that covers “training in all aspects of regulatory and internal policies and procedures related to the BSA, and shall provide specific enhanced training with regard to Customer Due Diligence and the monitoring of high-risk customers.”  The Order also prevents the Bank from entering new lines of business or providing services to new high-risk customers unless the Bank performs certain due diligence steps outlined in the Order.  Within 90 days of the Order, the Bank must also resolve all violations listed in the FDIC’s examination report.  Finally, the Order requires the Bank to provide quarterly updates to the FDIC and Illinois Division of Banking within 30 days following the end of each calendar quarter after the effective date of the Order.  If the Bank violates the consent order, the Bank could face civil money penalties.