The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) assessed a $300,000 civil penalty against North Dade Community Development Federal Credit Union in Miami Gardens, Florida for violating the Bank Secrecy Act (BSA).
“North Dade’s anti-money laundering (AML) failures exposed the United States financial system to significant opportunities for money laundering and terrorist financing from known high-risk jurisdictions,” FinCEN said.
North Dade has only $4 million in assets and just five employees.
But in 2013 alone, “the total transaction volume through North Dade by MSBs [money services businesses] included $1.01 billion in outgoing wires and $984 million in remotely captured deposits,” FinCen said.
Those accounts generated 90% of North Dade’s annual revenue.
“Why would MSBs located all over the world choose a small Florida credit union to conduct close to $2 billion in transactions? . . . North Dade welcomed customers far beyond its field of membership, without adequate policies and procedures to ensure AML compliance,” FinCEN Director Jennifer Shasky Calvery said in a statement.
North Dade contracted with a third-party vendor and money services business to provide services and sub-accounts to 56 money services business located in high-risk jurisdictions far outside its field of membership, including locations in Central America, the Middle East, and Mexico, FinCEN said.
North Dade consented to the fine and admitted that it willfully violated the Bank Secrecy Act program, reporting, and recordkeeping requirements.
Among the violations was a failure to comply with Section 314(a) of the USA PATRIOT Act, a program requiring financial institutions to search their records to locate accounts and transactions of persons that may be involved in terrorism or money laundering. FinCEN’s Section 314(a) factsheet for 2014 is here (pdf).
“When a small institution opens its doors to the world, takes on greater risks than it can manage, and puts profits before AML controls, bad actors are bound to take advantage,” FinCEN Director Shasky Calvery said.
North Dade failed to provide any meaningful risk assessment for its size and type of business and “blindly relied on a third-party vendor to conduct due diligence for all 56 MSBs that held sub-accounts,” FinCEN said.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.