Former US bank risk manager fined for AML compliance
The Financial Crimes Enforcement Network (FinCEN) fined Michael LaFontaine, former director of operational risk at American Bank, a subsidiary of US Bancorp, with $ 450,000 civil penalty for its negligence in failing to intercept violations of the Banking Secrecy Act (BSA), FinCEN announcement Wednesday (March 4).
The automated transaction monitoring software the U.S. bank had put in place wrongly capped the number of alerts, hampering law enforcement’s ability to detect suspicious activity. The bank also insufficiently staffed the BSA compliance function.
“Sir. LaFontaine was warned by his subordinates and by regulators that capping the number of alerts was dangerous and misguided. His actions prevented the proper filing of many, many SARs, which hampered the ability of the forces to order to fully combat crime and protect people, “said FinCEN Director Kenneth A. Blanco.” FinCEN encourages technological innovations to fight money laundering, but technology must be used correctly. ”
In February 2018, FinCEN worked with the Office of the Comptroller of the Currency (OCC) and the US Department of Justice (DOJ) to penalize the US bank $ 185 million for numerous offenses, including “violation voluntary ‘warrants for the BSA to have an anti-money laundering procedure (AML). The bank also failed to submit suspicious activity reports (SARs) on time.
Two subordinates alerted LaFontaine that they thought the system was insufficient due to the alert limits. The OCC also warned the U.S. bank that capping the system due to staff size and available resources could trigger law enforcement.
Staff had also sent memos to LaFontaine warning him that AML staff were “dangerously exhausted” due to increased SAR volumes and law enforcement investigations. LaFontaine “did not take sufficient action” to remedy the problems. The capped alerts had been in place for at least five years.
The Fifth European Union Anti-Money Laundering Directive (5AMLD) entered into force on January 10, with new regulations for cryptocurrencies, wallets and exchanges. Some operators have reacted by moving to countries with more relaxed rules, or simply by closing. The EU is already preparing 6AMLD, which further crack down on money laundering, especially online gambling.