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FDIC Enforcement Decisions and Orders

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{{5-31-96 p.C-3879}}
   [11,103] In The Matter of Lippo Bank, Los Angeles, California, Docket No. FDIC-94-174b (12-13-94).

   Bank to cease and desist from such unsafe or unsound practices as operating in violation of applicable laws or regulations. (This order was terminated by order of the FDIC dated 3-15-96. See ¶16,084.)

   [.1] Bank Secrecy Act—Qualified Officer Appointed

{{5-31-96 p.C-3880}}
   [.2] Community Reinvestment Act—Qualified Officer Appointed
   [.3] Consumer Laws—Compliance Officer Appointed
   [.4] Bank Secrecy Act—Independent Testing Required
   [.5] Bank Secrecy Act—Compliance Program—Minimum Requirements
   [.6] Violations of Law—Eliminate/Correct
   [.7] Consumer Laws—Employee Training Required
   [.8] Consumer Laws—Internal Compliance Audit

In The Matter of

LIPPO BANK
LOS ANGELES, CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-94-174b

   Lippo Bank, Los Angeles, 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 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 December 12, 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 violations 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 pages 2 and 2-a of the FDIC's Compliance Report of Examination as of April 5, 1994;
   (b) Part 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 April 5, 1994; and
   (c) Part 345 of the Rules and Regulations of the Federal Deposit Insurance Corporation, 12 C.F.R. Part 345, as more fully described on page 2-a-7 of the FDIC's Compliance Report of Examination as of April 5, 1994.
   IT IS FURTHER ORDERED, that the Bank, its institution-affiliated parties, and its successors and assigns, take affirmative action as follows:

   [.1] 1. Within 30 days from the effective date of this ORDER, the bank shall designate a qualified full-time senior officer as a Bank Secrecy Act Officer, to assure Bank's internal controls are in compliance with the BSA. This individual will be provided with the necessary training, authority, and responsibility to effectively administer the Bank's BSA program. The Regional Manager of the FDIC's San Francisco Regional Office ("Regional Manager") shall be advised in writing of the same.

   [.2] 2. Within 30 days from the effective date of this ORDER, the bank shall designate a qualified Community Reinvestment Act Officer. This individual will be provided with the necessary training, authority, and responsibility to effectively administer the Bank's CRA program. The Regional Manager shall be advised in writing of the same.

   [.3] 3. Within 30 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 ef- {{2-28-95 p.C-3881}}fectively administer the Bank's compliance program. The Regional Manager shall be advised in writing of the same.

   [.4] 4. Within 60 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 entitle "Guidelines for Monitoring Bank Secrecy Act Compliance." The independent testing should be conducted by qualified, training 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.

   [.5] 5. Within 90 days from the effective date of this ORDER, the Bank shall establish and implement a written internal compliance program on the Bank Secrecy Act, Financial Recordkeeping regulations and Community Reinvestment Act and related regulations, which at a minimum shall:

       (i) assign specific responsibilities to Bank personnel:
       (ii) outline an on-going training program for appropriate Bank personnel;
       (iii) set forth specific review procedures for monitoring compliance with applicable regulations;
       (iv) ensure compliance with the recordkeeping and reporting requirements for currency transactions over $10,000 (31 C.F.R. 103.22);
       (v) ensure compliance with the recordkeeping requirements for the purchase of Bank checks and drafts, cashier's checks, money orders and traveler's checks (31 C.F.R. § 103.29); and
       (vi) ensure the identification and timely, accurate and complete reporting, to law enforcement and supervisory authorities, of known or suspected criminal activity perpetrated against or involving the Bank's branches, consistent with all applicable federal and state laws, rules, regulations and guidelines.
       These requirements are in addition to the Bank's ongoing compliance program in all other areas.

   [.6] 6. 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-7 of the FDIC's Compliance Report of Examination as of April 5, 1994, 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 Manager as determined at subsequent examinations and/or visitations.

   [.7] 7. Within 60 days from the effective date of this ORDER, the Bank shall provide a systematic method of ongoing training in consumer compliance, including financial recordkeeping regulations, to all appropriate personnel. The Bank shall document the training activities for its recordkeeping purposes. The training should 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 Manager as determined at subsequent examinations and/or visitations.

   [.8] 8. 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.
   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 Manager 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 Manager 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 modi- {{2-28-95 p.C-3882}} fied, terminated, suspended, or set aside by the FDIC.
   Dated at San Francisco, California, this 19th day of December, 1994.
   Pursuant to delegated authority.

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