CA bank earns penalty for failing to take action over BSA compliance shortcomings

A California bank was assessed a nearly quarter-million-dollar penalty for violating a cease-and-desist order for violations related to compliance with anti-money laundering requirements, the federal insurer of bank deposits said Friday.

California Pacific Bank of San Francisco was assessed a $225,000 civil money penalty (CMP) for failing to take complete action on a 2016 cease-and-desist order related to shortcomings with the bank’s compliance with Bank Secrecy Act (BSA) and anti-money laundering (AML) requirements, the Federal Deposit Insurance Corp. (FDIC) said in its report on enforcement actions taken in October.

Among other things, the FDIC said: the bank’s BSA/AML compliance program was “not commensurate with its high money laundering and terrorist financing risk profile,” which included internal control deficiencies, failure to complete transaction reviews, and “BSA officer deficiencies”; failure to comply with the 2016 order; and more.

In other action, the agency said the FDIC Board upheld a prohibition of a former chief executive of an Alabama bank over insider lending.

The FDIC said Donald V. Watkins, Sr., former CEO of Alamerica Bank in Birmingham, Ala., was prohibited from further employment or participation in a federally insured financial institution. “The record plainly shows that Respondent, over a period of approximately two years, put the Bank at risk by receiving proceeds or a tangible economic benefit from nominee loans in excess of Regulation O limits,” the agency said, referring to Watkins (senior) as the respondent. “Respondent failed to inform the Bank of his relationship to these loans and their proceeds. In view of this conduct, the Board is persuaded that Respondent should be permanently barred from the banking industry.”

FDIC Makes Public October Enforcement Actions

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