Money Laundering, Terrorism & Financial Institutions
Published by Civic Research Institute,

27 Jun 2003
USA PATRIOT Act Monitor News Release: Bank Assessed $1.1 Million

The Korea Exchange Bank has consented to an assessment of $1.1 Million for BSA violations (In the Matter of Korea Exchange Bank, FinCEN Ruling 2003-04, posted at The Bank, according to FinCEN, failed to file approximately 39 Suspicious Activity Reports between March 1998 and May 2001, involving nearly $32 million in suspicious transactions. An FDIC-supervised bank, Korea Bank was obligated under 12 CFR 326.8 to develop and administer a program to assure compliance with the Bank Secrecy Act. In examination reports of March and October 1999 and March 2001, the FDIC cited the Broadway Branch of the Bank, located in New York, for failure to implement a program and failure to file SARs regarding transactions it knew, or had reason to suspect, were suspicious. As a result of the 1999 examinations, the Bank hired a law firm to conduct an internal investigation for potentially suspicious transactions and late-filed 26 SARs. Other suspicious activity included 65 wire transfers, all but two of which between $2,950 and $2,980 made by non-bank customers to the same group of beneficiaries, all apparently structured to avoid the recordkeeping requirements for funds transfers of $3,000 or more under 31 CFR 103.33(e). Other customers made successive cash deposits of just under $10,000 for which no SARs were filed. One customer made 155 cash deposits, aggregating $766,000, into an account, many between $8,000 and $10,000, under the CTR $10,000 threshold of 31 CFR 103.22. FinCEN determined that the violations were willful. Branch management was found to have had actual knowledge of the recordkeeping requirements for non-customer beneficiaries of wire transfers and that the Bank's procedures were ineffective in gathering the required information. The Bank's management failed to change procedures for almost an entire year. The Korea Exchange Bank, without admitting or denying the facts or determinations, consented to the $1.1 million assessment.



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