WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) assessed a $15 million civil money penalty against Bancrédito International Bank and Trust Corporation (Bancrédito) for willful violations of the Bank Secrecy Act (BSA) and its implementing regulations. This is FinCEN’s first enforcement action against a Puerto Rican International Banking Entity (IBE), and includes the first violation for failure to implement and maintain an Anti-Money Laundering (AML) program under 31 C.F.R. 1020.210(b) (effective on March 15, 2021), also known as the “Gap Rule.”
“Bancrédito processed millions of dollars in suspicious transactions through the United States on behalf of high-risk customers, providing correspondent accounts to foreign financial institutions without the required due diligence and reporting required by the BSA,” said FinCEN’s Director Andrea Gacki. “With today’s action, FinCEN is sending the message that the era of easy money laundering through Puerto Rican IBEs is over.”
Bancrédito admitted to willfully violating the BSA between October 2015 and May 2022, by failing to timely report suspicious transactions to FinCEN; failing to establish a due diligence program for correspondent accounts established, maintained, administered, or managed in the United States for foreign financial institutions; and failing to implement and maintain an AML program.
Bancredito did not comply with its SAR reporting obligations, failing to file SARs for years and ignoring violations cited by its primary regulator, the Puerto Rico Office of the Commissioner of Financial Institutions (OCIF). These transactions included suspicious activity by a Bancrédito executive and suspicious activity involving customers in the high risk jurisdiction of Venezuela, including customers linked to foreign bribery and money laundering. Failure to timely and accurately file SARs deprives law enforcement of critical financial intelligence used to safeguard the financial system from illicit use and combat money laundering, and harms national security.
Bancrédito also admitted that it failed to establish a due diligence program for correspondent accounts held at Bancrédito by foreign financial institutions. Correspondent accounts held in the U.S. by foreign financial institutions serve as an important gateway to the U.S. economy, but have long been recognized to present unique risks that U.S. financial institutions need to appropriately manage. Bancrédito’s failure allowed nearly an unfettered flow of funds by these international correspondent accounts through the U.S. financial system, jeopardizing the integrity of the United States financial system.
Lastly, Bancrédito admitted that it failed to implement and maintain an AML program. Starting in March 15, 2021, IBEs and other banks without a Federal functional regulator (also known as “Gap Institutions”) were required to implement and maintain an AML program. See 85 FR 57129 (Sept. 15, 2020). AML programs form the backbone of the Bank Secrecy Act, and are a key tool in preventing U.S. financial institutions from being used for money laundering and other financial crimes.
Bancrédito was the oldest and among the largest IBEs in Puerto Rico. IBEs were identified as having an elevated risk of money laundering in the U.S. Department of the Treasury’s 2022 National Money Laundering Risk Assessment. See https://home.treasury.gov/system/files/136/2022-National-Money-Laundering-Risk-Assessment.pdf.
FinCEN appreciates OCIF’s invaluable assistance in this matter. FinCEN’s Enforcement and Compliance Division is responsible for investigating violations of the BSA. For additional information regarding the facts and circumstances associated with this enforcement action, including the specific BSA violations and their underlying causes, please see the Consent Order between FinCEN and Bancrédito here.