Bank fined, due diligence controls found inadequate

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It’s not enough to have any old compliance program in place. Regular, effective training with an emphasis on ongoing due diligence is needed. That’s the lesson a local US bank has learned after being fined US$4.5 million under anti-money laundering (AML) laws, despite having an AML program in place.

The Bank of Mingo in Williamson, West Virginia was fined US$4.5 million as part of a deferred prosecution agreement, after acknowledging that one of its branch managers had failed to file currency transaction reports (CTRs) for $9 million in structured transactions for one corporate customer.

The structured transactions were issued from accounts held by two business partners who operated companies that provided contract labour to coal operations in southern West Virginia.

The partners later formed another contracting company, Aracoma Contracting, LLC (Aracoma), under a nominee owner’s name. Mingo paid out advances requested by Aracoma to identified Aracoma employees, in pre-counted cash. Whenever withdrawals were made, the teller entered the employee’s name, not Aracoma itself, into the cash log. Mingo did not aggregate the transactions or file CTRs.

The Bank of Mingo’s existing AML program included mandatory annual training for employees, as well as a “Know Your Customer” component that required bank employees to gather information about new employees or accounts.

Mingo’s penalty includes a civil forfeiture and civil monetary penalties. Mingo has since appointed a new Bank Secrecy Act (BSA) officer, reviewed its accounts for BSA compliance and established a new BSA training program.

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Source: JD Supra Business Advisor