FinCEN Imposes $15 Million Penalty on Bancrédito for Bank Secrecy Act Violations

FinCEN Imposes $15 Million Penalty on Bancrédito for Bank Secrecy Act Violations


The Financial Crimes Enforcement Network (FinCEN) has taken decisive action by issuing a $15 million civil money penalty against Bancrédito International Bank and Trust Corporation (Bancrédito). This penalty is the outcome of Bancrédito's willful violations of the Bank Secrecy Act (BSA) and its implementing regulations, marking a significant development in financial regulatory enforcement. Notably, this represents FinCEN's inaugural enforcement action against a Puerto Rican International Banking Entity (IBE) and encompasses the first violation for failing to establish and maintain an Anti-Money Laundering (AML) program under the "Gap Rule."

Andrea Gacki, Director of FinCEN, stated, "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. With today's action, FinCEN is sending the message that the era of easy money laundering through Puerto Rican IBEs is over."

Bancrédito openly acknowledged its willful breach of the BSA during the period spanning from October 2015 to May 2022. The violations included:

  1. Failure to Report Suspicious Transactions: Bancrédito neglected to promptly report suspicious transactions to FinCEN, a vital obligation under the BSA.
  2. Deficient Due Diligence Program: The bank did not establish a due diligence program for correspondent accounts held in the United States for foreign financial institutions.
  3. Inadequate AML Program: Bancrédito did not implement and sustain an effective Anti-Money Laundering (AML) program as mandated by the Gap Rule, in effect from March 15, 2021.

One particularly concerning aspect of this case was Bancrédito's failure to fulfill its Suspicious Activity Report (SAR) reporting responsibilities. The bank failed to submit SARs over an extended period, disregarding violations brought to its attention by its primary regulator, the Puerto Rico Office of the Commissioner of Financial Institutions (OCIF). These transactions included suspicious activities involving a Bancrédito executive and customers with ties to the high-risk jurisdiction of Venezuela, notably linked to foreign bribery and money laundering. The failure to promptly file SARs significantly undermines law enforcement's ability to combat financial crimes and protect national security.

Furthermore, Bancrédito's inability to establish a due diligence program for correspondent accounts held at the bank by foreign financial institutions posed a significant risk. These correspondent accounts serve as gateways to the U.S. economy and are recognized for their unique risks that require appropriate management. Bancrédito's shortcomings in this regard allowed a substantial flow of funds through the U.S. financial system, potentially jeopardizing the integrity of the nation's financial infrastructure.

Lastly, Bancrédito's failure to implement and maintain an AML program, as required by the Gap Rule, is a particularly critical breach. AML programs play a pivotal role in the Bank Secrecy Act and are essential tools in preventing U.S. financial institutions from being exploited for money laundering and other illicit financial activities.

Bancrédito, the oldest and one of the largest IBEs in Puerto Rico, faced elevated money laundering risks, as acknowledged in the U.S. Department of the Treasury's 2022 National Money Laundering Risk Assessment.

FinCEN expressed its gratitude for the invaluable assistance provided by OCIF during this investigation. FinCEN's Enforcement and Compliance Division is dedicated to probing BSA violations and ensuring the integrity of the financial system.

For a more detailed account of the facts and circumstances surrounding this enforcement action, including specific BSA violations and their underlying causes, please refer to the Consent Order between FinCEN and Bancrédito here.