The US Department of Justice announced on June 30 that a community bank entered into a non-prosecution agreement to resolve a Bank Secrecy Act investigation.
The bank agreed to pay more than $9.7 million in total, covering penalties and forfeited proceeds linked to the alleged compliance failures.
Federal authorities alleged that the bank willfully failed to maintain an adequate anti-money laundering and countering the financing of terrorism programme between 2010 and 2021.
The DOJ alleged that the bank allowed certain customers to continue using accounts even after compliance personnel recommended additional review or account closure following identified suspicious activity.
Regulators also found that the bank lacked sufficient controls for high-risk customers, including no clear procedures for account closure decisions, assigned responsibilities, documentation requirements, or review timelines.
The DOJ further alleged that certain bank personnel allowed business considerations to override compliance concerns, resulting in continued account access for customers subject to multiple suspicious activity reports.
A check kiting scheme was allegedly allowed to continue for more than a decade due to weaknesses in the bank’s AML/CFT programme, causing approximately $6.3 million in losses to another financial institution.
As part of the resolution, the bank agreed to pay a $9 million penalty and forfeit approximately $736,000 in proceeds from overdraft fees connected to the accounts involved in the alleged conduct.
The bank also committed to continuing enhancements to its AML/CFT programme, cooperating with the DOJ’s investigation, reporting potential violations of federal criminal law, and providing updates on remediation efforts.
The resolution underscores the DOJ’s continued role in financial services enforcement, with experts noting that institutions should ensure AML/CFT policies clearly define escalation procedures, account closure review processes, documentation requirements, and responsibilities for managing high-risk customer relationships.
Financial institutions across the sector are being urged to review internal compliance frameworks to avoid similar enforcement actions as regulatory scrutiny of AML/CFT programmes remains intense.
The case serves as a stark reminder that allowing commercial priorities to override compliance obligations carries significant legal and financial consequences for banking organisations of all sizes.