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Financial Services Law Insights and Observations

FDIC releases October enforcement actions, includes BSA and TILA violations

Federal Issues FDIC Enforcement Flood Insurance Flood Disaster Protection Act Bank Secrecy Act Anti-Money Laundering Bank Compliance TILA SARs

Federal Issues

On November 30, the FDIC announced a list of administrative enforcement actions taken against banks and individuals in October. Included among the actions is an order to pay a civil money penalty of $9,600 issued against a Louisiana-based bank for alleged violations of the Flood Disaster Protection Act in connection with alleged failures to obtain flood insurance coverage on loans at or before origination or renewal.

Consent orders were also issued against three separate banks related to alleged weaknesses in their Bank Secrecy Act (BSA) and/or BSA/anti-money laundering (BSA/AML) compliance programs. (See orders here, here, and here.) Among other things, the banks are ordered to: (i) implement comprehensive written BSA/AML compliance programs, which include revising BSA risk assessment policies, developing a system of BSA internal controls, and enhancing suspicious activity monitoring and reporting and customer due diligence procedures; (ii) conduct independent testing; and (iii) implement effective BSA training programs. The FDIC further requires the Florida and New Jersey-based banks to conduct suspicious activity reporting look-back reviews.

In addition, a Kentucky-based bank was ordered to pay a civil money of $300,000 for allegedly violating TILA by “failing to clearly and conspicuously disclose required information related to the [b]ank’s Elastic line of credit product” and Section 5 of the FTC ACT by “using a processing order for certain deposit account transactions contrary to the processing orders disclosed in the [b]ank’s deposit account disclosures.”

There are no administrative hearings scheduled for December 2018. The FDIC database containing all 17 enforcement decisions and orders may be accessed here.

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