OCC Enters Consent Order Against Small Bank for Unaddressed BSA/AML Violations

The OCC entered a consent order against a small Texas-based bank for alleged long-standing violations of the Bank Secrecy Act (BSA) and federal anti-money laundering (AML) requirements.

In 2021, the OCC entered into a formal agreement with the bank related to alleged deficiencies in the bank’s BSA/AML program.  Among other things, the agreement required the bank to take corrective action with respect to compliance with its BSA/AML policies and procedures, to improve its customer due diligence (including for certain types of higher-risk customers), and to address third-party risk management for merchant processors (i.e., entities which process credit and debit card transactions for the bank).

In the new consent order, the OCC asserts that the bank failed to implement a sufficient BSA/AML compliance program, failed to comply with the 2021 agreement, had not remedied compliance problems previously identified by the OCC, and failed to adequately monitor suspicious activity and file suspicious activity reports (SARs).  The bank did not admit or deny the allegations in the consent order.

The consent order requires the bank to take various corrective actions, including:

• Creating a new board-level BSA/AML compliance committee where a majority of the committee’s members are directors who are not employees or officers of the bank or any of its subsidiaries or affiliates;
• Revising and implementing new policies and procedures to address known BSA/AML risks and violations;
• Implementing a new suspicious activity monitoring and reporting program to ensure timely identification and review of unusual activity, and the filing of SARs where needed;
• Conducting a 15-month look-back review of previously unreported suspicious activity to determine if any additional investigation is needed for past activity and to determine whether any additional SARs should be filed; and
• Placing special obligations on the bank’s board of directors to direct and oversee compliance with the consent order.

The consent order did not impose a monetary penalty.