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FDIC Enforcement Decisions and Orders

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{{5-31-95 p.C-3600}}
   [10,950] In the Matter of Bank of Jefferson, Jefferson, South Carolina, Docket No. FDIC-94-15b (2-23-94).

   Bank to cease and desist from such unsafe or unsound practices as failing to provide adequate supervision over the Bank's affairs and operating in violation of applicable laws or regulations. (This order was terminated by order of the FDIC dated 3-29-95; see ¶15,988.)

   [.1] Bank Secrecy Act—Compliance—Written Program Required
   [.2] Violations of Law—Eliminate/Correct
   [.3] Shareholders—Disclosure—Cease and Desist Order

{{5-31-94 p.C-3601}}
In the Matter of

BANK OF JEFFERSON
JEFFERSON,SOUTH CAROLINA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-94-15b

   Bank of Jefferson, Jefferson, South Carolina ("Bank"), having been advised of its right to receive a written Notice of Charges and of Hearing ("NOTICE") detailing unsafe or unsound banking practices and violations of applicable law and regulations alleged to have been committed by the Bank and its right to a hearing regarding such alleged charges under section 8(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(b)(1), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT") with a representative of the Legal Division of the Federal Deposit Insurance Corporation ("FDIC"), dated February 8, 1994, whereby solely for the purpose of this proceeding and without admitting or denying any of the alleged charges of unsafe or unsound banking practices and violations of applicable law and regulations. The Bank consented to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC.
   The FDIC considered the matter and determined that it had reason to believe that the Bank had engaged in unsafe or unsound banking practices and had committed violations of applicable law and regulations.
   The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

ORDER TO CEASE AND DESIST

   IT IS HEREBY ORDERED, that the Bank, its institution-affiliated parties, as such term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), and its successors and assigns cease and desist from the following unsafe or unsound banking practices and violations of law and regulations:
   A. Failing to provide adequate supervision and direction over the Bank's compliance with applicable laws and regulations by the board of directors of the Bank to prevent violations of the Bank Secrecy Act, 31 U.S.C. §§ 5311–5326 ("Bank Secrecy Act"), and the implementing regulations promulgated thereunder by the Department of the Treasury at 31 C.F.R. Part 103, made applicable to insured state nonmember banks by 31 C.F.R. § 103.46(b)(3) and section 326.8 of the FDIC's Rules and Regulations ("Regulations"), 12 C.F.R. § 326.8; and
   B. Engaging in violations of section 103.22 of the Department of the Treasury's Bank Secrecy Act regulations, 31 C.F.R. § 103.22, and section 326.8 of the Regulations, 12 C.F.R. § 326.8, entitled "Bank Secrecy Act compliance."
   IT IS FURTHER ORDERED that the Bank and its successors and assigns take affirmative action as follows:

       [.1] 1. (a) Within 45 days from the effective date of this ORDER, the Bank shall review and revise, if necessary, its written Bank Secrecy Act compliance program to ensure its conformance with sections 326.8(b) and (c) of the Regulations, 12 C.F.R. §§ 326.8(b) and (c). Such written compliance program, as revised, shall, at a minimum, provide for each of the elements listed in sections 326.8(c)(1)-(4) of the Regulations, 12 C.F.R. §§ 326.8(c)(1)(4), and in the FDIC's Policy Statement entitled "Guidelines for Monitoring Bank Secrecy Act Compliance," FDIC bank letter (DL-16-87) dated May 18, 1987, a copy of which is appended hereto as Appendix A. Such written compliance program shall, in addition, provide for the continued administration of the program, reasonably designed to assure and monitor compliance with the recordkeeping and reporting requirements set forth in the Bank Secrecy Act and the implementing regulations contained in 31 C.F.R. Part 103. The board of directors shall approve the written Bank Secrecy Act compliance program and/or any subsequent modification thereto, which approval(s) shall be recorded in the minutes of the board of directors. Thereafter, the Bank and its successors and assigns shall implement and follow the written Bank Secrecy Act compliance program and any subsequent modification thereto.
       (b) Within 45 days from the effective date of this ORDER, the Bank shall designate or reaffirm the designation of: (i) the individual or individuals responsible for coordinating and monitoring day-to-day compliance with the Bank Secrecy Act and implementing regulations; (ii) the {{5-31-94 p.C-3602}}individual or individuals qualified and responsible for conducting independent testing of the Bank's compliance with the Bank Secrecy Act and implementing regulations; and (iii) the individual or individuals qualified and responsible for training appropriate Bank personnel in the requirements of and compliance with the Bank Secrecy Act and implementing regulations. The board of directors shall approve such designations, which approval shall be recorded in the minutes of the board of directors. Thereafter, the board of directors shall adequately review and monitor the performance and activities of the designated individuals.
       (c) A copy of the revised written Bank Secrecy Act compliance program, as required by paragraph 1(a) of this ORDER, and the identity of the individuals designated pursuant to paragraph 1(b) of this ORDER, as well as any additional or replacement personnel so designated in the future, shall be submitted to the Regional Director of the FDIC's Atlanta Regional Office ("Regional Director").

   [.2] 2. Within 30 days of the effective date of this ORDER, the Bank shall take all necessary steps to eliminate or correct all violations of section 103.22 of the Department of the Treasury's Bank Secrecy Act regulations, 12 C.F.R. § 103.22, committed by the Bank, as described on page 2 of the FDIC's Report of Visitation of the Bank as of August 31, 1993.
   [.3] 3. Following the effective date of this ORDER, the Bank shall send to its shareholders or otherwise furnish a description of this ORDER (a) in conjunction with the Bank's next shareholder communication and also (b) in conjunction with its notice or proxy statement preceding the Bank's next shareholder meeting. The description shall fully describe this ORDER in all material respects. The description and any accompanying communication, statement or notice shall be sent to the FDIC, Registration and Disclosure Section, Washington, D.C. 20429, for review at least 20 days prior to dissemination to shareholders. Any changes requested to be made by the FDIC shall be made prior to dissemination of the description, communication, notice or statement.
   4. Within 45 days from the effective date of this ORDER, and within 15 days after the end of each calendar quarter thereafter while this ORDER remains in effect, the Bank shall furnish written progress reports to the Regional Director detailing the form and manner of any actions taken to secure compliance with this ORDER and the results thereof. Such reports shall address all requirements of section 326.8(b) and (c) of the Regulations, 12 C.F.R. §§ 326.8(b) and (c), and shall include the results of the required independent testing for compliance with the Bank Secrecy Act and implementing regulations. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Director has released the Bank in writing from making further reports. All progress reports and other written responses to this ORDER shall be reviewed by the board of directors of the Bank and made a part of the minutes of the appropriate board meeting.
   5. The provisions of this ORDER shall become effective ten (10) days from the date of its issuance and shall be binding upon the Bank, its institution-affiliated parties, and its successors and assigns. The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this ORDER shall have been modified, terminated, suspended, or set aside by the FDIC.
   Dated at Atlanta, Georgia, this 23 day of February, 1994.
   Pursuant to delegated authority.

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