FinCEN Sharpens Teeth with New Enforcement Division Practical Considerations for Avoiding FinCENs Bite
By V. GERARD COMIZIO, LAWRENCE D. KAPLAN & HELEN Y. LEE
On September 23, 2013, FinCEN announced the assessment of a $37.5 million civil money penalty (“CMP”) against TD Bank, N.A. for failure to file suspicious activity reports related to a “massive Ponzi scheme” orchestrated by a Florida attorney. The FinCEN enforcement action was conducted in coordination with the OCC and the SEC. On the following day, FinCEN coordinated with the OCC and the U.S. Attorney’s Office for New Jersey in announcing the assessment of a $4.1 million CMP against a small New Jersey-based savings association that was accused of, among other things, “lacking an effective [AML] program reasonably designed to manage the risks of money laundering and other illicit activity, failing to conduct adequate due diligence on foreign correspondent accounts, and failing to detect and adequately report in a timely manner suspicious activities in the accounts of foreign money exchange houses. The CMPs represent the first civil money penalties assessed by FinCEN’s new Enforcement Division resulting from FinCEN’s recent internal reorganization completed in June 2013. The latest FinCEN and other agency actions are instructive to financial institutions in considering the extent and importance of filing so-called “defensive SARs,” which traditionally have been discouraged by regulators. This client alert offers practical considerations for institutions to enhance their BSA/AML programs to meet supervisory expectations for the filing of SARs, including considerations with the extent and renewed importance of a robust SARs filing compliance program.