WASHINGTON -- The Financial Crimes Enforcement Network, FDIC, and the New York State Banking Department last week announced a civil money penalty of $12 million against Israel Discount Bank of New York for violations of federal and state anti-money laundering laws and regulations.
This sum was in addition to $8.5 million already paid to the New York District Attorney's Office pursuant to an agreement reached with the bank in December 2005. Israel Discount Bank of New York, without admitting or denying the allegations, consented to payment of the civil money penalties.
The agencies had determined that Israel Discount Bank of New York failed to implement an adequate Bank Secrecy Act/anti-money laundering program with internal controls and appropriate measures to detect and report money laundering and other suspicious activity in a timely manner. The deficiencies included failure to establish appropriate, specific due diligence policies, procedures and controls reasonably designed to detect and report instances of money laundering through its correspondent accounts for non-U.S. persons, as required by section 312 of the USA PATRIOT Act and its implementing regulations.
"The significant penalty assessed in this case emphasizes the importance for banks of having strong internal controls to assure compliance with anti-money laundering regulations and to detect and report potential money laundering or other illicit financial activities," FDIC Chairman Sheila C. Bair said.
Similarly New York State Superintendent of Banks Diana L. Taylor stated, "The size of the settlement should serve as a reminder to all financial institutions that detecting and reporting violations of Bank Secrecy Act and anti-money laundering regulations is necessary if we are to keep our financial system free from fraud and abuse."
"When a program is deficient we have lost valuable data that may have been crucial to the protection of other institutions and individuals," FinCEN Director Robert W. Werner noted.