Puerto Rico-based Bancrédito International Bank and Trust Corporation was assessed a $15 million fine by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) for admitted violations of the Bank Secrecy Act (BSA) regarding suspicious activity monitoring and anti-money laundering (AML) compliance.
The penalty marks the first FinCEN action against a Puerto Rican international banking entity (IBE), said the agency in its press release Friday. FinCEN also for the first time enforced a 2021 rule requiring minimum standards for AML programs for banks lacking a federal regulator.
“Bancrédito processed millions of dollars in suspicious transactions through the United States on behalf of high-risk customers, providing correspondent accounts to foreign financial institutions without the required due diligence and reporting required by the BSA,” said FinCEN Director Andrea Gacki in the release. “With today’s action, FinCEN is sending the message that the era of easy money laundering through Puerto Rican IBEs is over.”
The details: Between October 2015 and May 2022, Bancrédito failed to timely file suspicious activity reports (SARs), establish a due diligence program for accounts with U.S. links, and implement and maintain an AML program.
The bank also admitted it failed in its due diligence obligations regarding correspondent accounts it held by foreign financial institutions, allowing “nearly an unfettered flow of funds by these international correspondent accounts through the U.S. financial system,” FinCEN said.
Compliance considerations: Bancrédito had been previously warned by its primary regulator in Puerto Rico regarding its SARs reporting failures, according to FinCEN. These included transactions from customers in Venezuela linked to foreign bribery and money laundering.
“The high-risk nature of Bancrédito’s customer base, especially those with ties to Venezuela, warranted robust BSA compliance,” said FinCEN in its order. “Instead, the bank’s compliance with the BSA has been marked by repeated deficiencies and violations.”
The bank in 2015 agreed to a consent order with its Puerto Rican regulator regarding its AML failures that required it to make improvements. However, subsequent examinations still found its program ineffective.
Bancrédito entered receivership in January. It could not be reached for comment.