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Rothstein fallout: Florida bank penalized $4 million for ‘willful’ AML violations

A Florida bank that failed to file suspicious activity reports on time for accounts used in a giant Ponzi scheme will pay $4 million to settle federal civil charges that its defective compliance program led to violations of anti-money laundering laws.

Gibraltar Private Bank and Trust Company of Coral Gables was penalized $4 million Thursday by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) for willfully violating the Bank Secrecy Act.

The agency agreed to accept a $1.5 million payment to the Treasury Department to satisfy the penalty.

The Office of the Comptroller of the Currency (OCC) also issued a consent order against the bank that imposed a $2.5 million penalty.

The bank failed to file on time at least 120 suspicious activity reports (SARs) involving nearly $558 million in transactions during 2009 to 2013.

The deficiencies delayed Gibraltar’s SAR reporting for accounts related to a $1.2 billion Ponzi scheme led by Florida lawyer Scott Rothstein, FinCEN said.

Rothstein was convicted in 2010 and sentenced to 50 years in federal prison.

FinCEN Director Jennifer Shasky Calvery said in a statement Thursday: “We may never know how [Rothstein’s]  scheme might have been disrupted had Gibraltar more rigorously complied with its obligations under the law.”

The OCC first warned Gibraltar of the AML deficiencies in 2010. After Gibraltar’s compliance failures persisted, the OCC placed the bank under a consent order in 2014.

The OCC — an independent bureau of the Treasury Department — is the primary regulator of all U.S. national banks and federal savings associations.

Gibraltar’s staff weren’t able to spot unusual account activity because of inaccurate account opening information and customer risk profiles.

The bank’s automated monitoring system “generated an unmanageable number of alerts, including large numbers of false positives, which caused significant delays in Gibraltar’s review,” FinCEN said.

Gibraltar also failed to properly train its compliance staff, the agency said.

FinCEN coordinated its enforcement action with the OCC. It assessed a $4 million civil penalty against Gibraltar but said the penalty was concurrent with the OCC’s $2.5 million penalty.

Gibaltrar satisfied both penalties “by an immediate payment of $1.5 million to the U.S. Department of the Treasury, and by paying $2.5 million in accordance with the penalty imposed by the OCC,” FinCEN said.

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FinCEN’s Assessment of Civil Money Penalty of February 25, 2016 In the Matter of Gibraltar Private Bank and Trust Company is here (pdf).

The OCC’s Consent Order for the Assessment of a Civil Money Penalty is here (pdf).


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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