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FDIC Enforcement Decisions and Orders

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{{7-31-96 p.C-3740}}
   [11,027] In the Matter of San Gabriel Valley Bank, El Monte, California, Docket No. FDIC-94-104b (8-11-94).

   Bank to cease and desist from such unsafe or unsound practices as operating in violation of applicable laws or regulations, particularly Regulations B, CC, and DD and the Consumer Protection Act. (This order was terminated by order of the FDIC dated 5-16-96. See ¶16,096.)

[.1] Bank Secrecy Act—Officer Required
[.2] Bank Secrecy Act—Compliance—Independent Testing
[.3] Bank Secrecy Act—"Know Your Customer" Policies
[.4] Violations of Law—Eliminate/Correct
[.5] Consumer Laws—Personnel Training Required
[.6] Audit—Written Procedures Required

In the Matter of

SAN GABRIEL VALLEY BANK
EL MONTE, CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-94-104b

   San Gabriel Valley Bank, El Monte, California ("Bank"), having been advised of its right to a Notice of Charges and of Hearing detailing the unsafe or unsound banking practices and violations of law and/or regulations alleged to have been committed by the {{10-31-94 p.C-3741}} Bank and of its right to a hearing on the 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 counsel for the Federal Deposit Insurance Corporation ("FDIC"), dated July 19, 1994, whereby solely for the purpose of this proceeding and without admitting or denying the alleged charges of unsafe or unsound banking practices and violations of law and/or 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 law and/or 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 that 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 operating in violation of the following laws, rules, and/or regulations:
   (a) Section 326.8 of the Rules and Regulations of the Federal Deposit Insurance Corporation, 12 C.F.R. § 326.8, as more fully described on page 2 of the FDIC's Compliance Report of Examination as of December 21, 1993;
   (b) Section 103 of the Rules and Regulations of the Department of Treasury, 31 C.F.R. Part 103, as more fully described on pages 2-A through 2-A-5 of the FDIC's Compliance Report of Examination as of December 21, 1993;
   (c) Regulation B of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 202, as more fully described on pages 2-A-6 to 2-A-7 of the FDIC's Compliance Report of Examination as of December 21, 1993;
   (d) Regulation CC of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 229, as more fully described on pages 2-A-8 through 2-A-12 of the FDIC's Compliance Report of Examination as of December 21, 1993;
   (e) Regulation DD of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 230, as more fully described on page 2-A-13 of the FDIC's Compliance Report of Examination as of December 21, 1993; and
   (f) Part 615 of the Consumer Credit Protection Act, 15 U.S.C. 1681m, as more fully described on page 2-A-13 of the FDIC's Compliance Report of Examination as of December 21, 1993;
   IT IS FURTHER ORDERED, that the Bank, its institution-affiliated parties, and its successors and assigns, take affirmative action as follows:

   [.1] 1. During the term of this Order, the Bank shall retain a qualified full-time senior officer as a Bank Secrecy Act Officer, and shall advise the Regional Director of the FDIC's San Francisco Regional Office ("Regional Director") in writing of the same.
   2. Within 60 days from the effective date of this ORDER, the Bank shall designate a qualified compliance officer. This individual will be provided with the necessary training, authority, and responsibility to effectively administer the Bank's compliance program. The Regional Director shall be advised in writing of the same.

   [.2] 3. Within 90 days from the effective date of this ORDER, the Bank shall provide a system for independently testing its policies, procedures, and practices for compliance with the Bank Secrecy Act and the Financial Recordkeeping regulations, 31 C.F.R. Part 103. The independent testing is to be conducted on an annual basis in compliance with the procedures described in the FDIC Statement of Policy entitled "Guidelines for Monitoring Bank Secrecy Act Compliance." The independent testing should be conducted by qualified, trained and experienced third parties, such as independent public accountants or specialists in this subject matter, who are not, in any manner, affiliated with the Bank or any of the Bank's subsidiaries or affiliates. Written reports documenting the testing results and providing recommendations for improvement shall be presented to the Bank's audit committee.

   [.3] 4. Within 90 days the Bank shall establish "know your customer" policies which shall enable the Bank to:
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       (i) identify and confirm the identity of each of the customers of the Bank's branches;
       (ii) predict with relative certainty the types of transactions that each of the customers of the branches are likely to transact with the branches;
       (iii) monitor the transactions of each of the customers of the Bank's branches to determine if each transaction that occurs is inconsistent with the customer's regular and ordinary practices; and
       (iv) investigate further, and, where necessary, prohibit transactions involving customers whose identities or business activities cannot be sufficiently confirmed or whose transactions are inconsistent with that customer's normal practices and no satisfactory explanation exists.

   [.4] 5. Within 30 days from the effective date of this ORDER, the Bank shall correct all violations of law described on pages 2 through 2-A-13 of the FDIC's Compliance Report of Examination as of December 21, 1993 to the extent that correction is within the Bank's capability, and implement procedures to prevent their recurrence. The Bank's actions as required by this paragraph shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.5] 6. Within 60 days from the effective date of this ORDER, the Bank shall provide a systematic method of on-going training in consumer compliance and civil rights regulations, including financial recordkeeping regulations, to all appropriate personnel. The Bank shall document the training activities for its recordkeeping purposes. The training should be updated to ensure that appropriate personnel are provided with the most current and up-to-date information. The Bank's actions as required by this paragraph shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.6] 7. Within 90 days from the effective date of this ORDER, the Bank shall develop written audit procedures and provide for an adequate system for testing bank policies, procedures and practices for compliance with all consumer regulations.
   8. Within 30 days from the effective date of this ORDER, the Bank shall develop procedures to ensure that all changes to the consumer regulations, including Financial Recordkeeping regulations, are disseminated to all appropriate personnel.
   9. Within 30 days of the end of the calendar quarter following the effective date of this ORDER, and within thirty days of the end of each calendar quarter thereafter, 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 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.
   This ORDER shall become effective ten (10) days from the date of its issuance.
   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 San Francisco, California, this 11th day of August, 1994.
   Pursuant to delegated authority.

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