Failure to take action against known improper accounting practices costs bank company $1 million

An Illinois bank holding company will pay a $1 million civil money penalty (CMP) after suffering a $2.7 million loss due to weak internal controls, failure to supervise staff and a lack of segregation of duties connected to a bank owned by the company, the Federal Reserve said Thursday.

The Fed said that Wintrust Financial Corp. of Rosemont, Ill., was assessed the $1.012 million CMP after the company – for eight years, starting in 2008 – did not address a failure by the chief financial officer of Wintrust-owned Hinsdale Bank and Trust to perform a daily reconciliation of a loan-related general ledger account, which carried an unreconciled balance of more than $2 million. The Fed said that Wintrust was aware of the CFO’s failure to perform the reconciliation.

By the time the firm did address the issue, in 2015, the firm had lost $2.7 million as a result of the internal control and other deficiencies, and through “a lack of written policies and procedures, which permitted Hinsdale’s then-CFO to engage in improper accounting practices in an attempt to conceal the unreconciled balance until March 2015.”

Federal Reserve Board issues enforcement actions with Wintrust Financial Corporation (and other actions)