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FDIC Enforcement Decisions and Orders

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{{5-31-96 p.C-3999}}
   [11,162] In the Matter of Pan American Bank, Los Angeles, California, Docket No. FDIC-94-184b (4-13-95).

   Bank to cease and desist from such unsafe or unsound practices as operating in violation of applicable laws or regulations regarding consumer protection, civil rights and/or bank secrecy. (This order was terminated by order of the FDIC dated 3-27-96. See ¶16,086.)

   [.1] Bank Secrecy Act—Senior Officer Required
   [.2] Bank Secrecy Act—Compliance Testing Required
   [.3] Bank Secrecy Act—Compliance Officer Required
   [.4] Bank Secrecy Act—Compliance Program Required
   [.5] Consumer and Civil Rights Laws—Personnel Training
   [.6] Consumer and Civil Rights Laws—Compliance Audit
   [.7] Violations of Law—Eliminate/Correct

In the Matter of

PAN AMERICAN BANK
LOS ANGELES, CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-94-184b

   Pan American Bank, Los Angeles, California ("Bank"), having been advised of its {{5-31-96 p.C-4000}}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 March 29, 1995, 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 the following unsafe and unsound banking practices and operating in violation of 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 thru 2-a of the FDIC's Compliance Report of Examination as of May 19, 1994; and
   (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-1 thru 2-a-5 of the FDIC's Compliance Report of Examination as of May 19, 1994.
   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 designate a qualified full-time senior officer as a Bank Secrecy Act Officer. This individual will be provided with the necessary training, authority, and responsibility to effectively administer the Bank's Bank Secrecy Act program.

   [.2] 2. 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] 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 effectively administer the Bank's compliance program and to train and supervise personnel in compliance matters.

   [.4] 4. Within 90 days from the effective date of this ORDER, the Bank shall establish and implement a written internal compliance program which at a minimum shall:

       (i) assign specific responsibilities to Bank personnel;
       (ii) set forth specific review procedures for monitoring compliance with applicable regulations;
       (iii) ensure compliance with the recordkeeping and reporting requirements for currency transactions over $10,000 (31 C.F.R. 103.22);
       (iv) 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
       (v) 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, consis- {{6-30-95 p.C-4001}}tent with all applicable federal and state laws, rules, regulations and guidelines.

   [.5] 5. 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 Manager as determined at subsequent examinations and/or visitations.

   [.6] 6. Within 60 days from the effective date of this ORDER, the Bank shall develop and implement a compliance audit and review program that provides for, at a minimum, an annual audit or review to ensure on-going compliance with applicable consumer laws and regulations. Results of any audits or reviews and the steps taken to correct any identified deficiencies shall be documented, presented to the Bank's board of directors, and noted in official board minutes.

   [.7] 7. Within 30 days from the effective date of this ORDER, the Bank shall correct all violations of law as described on pages 2 through 2-a-10 of the FDIC's Compliance Report of Examination as of May 19, 1994, 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.

   [.8] 8. The Bank shall take all further necessary steps to ensure future compliance with all applicable banking laws, rules and/or regulations.

   [.9] 9. On or before the 30th day after the end of the first calendar quarter following the effective date of this ORDER, and on or before the 30th day after the end of every calendar quarter thereafter, the Bank shall furnish written progress reports to the Regional Manager and to the Superintendent of Banks for the State of California ("Superintendent") which detail the form and manner of any actions taken to secure compliance with this ORDER and the results thereof. The Bank may discontinue submitting such reports when the corrections required by this ORDER have been accomplished and the Regional Manager and the Superintendent have expressly released the Bank in writing from making any 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 13th day of April, 1995.
   Pursuant to delegated authority.

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