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FDIC Enforcement Decisions and Orders

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{{3-31-02 p.C-4553}}
   [11,519] In the Matter of First Mountain Bank, Big Bear Lake, California, Docket No. 98-050b (6-15-98)

   A cease and desist order was issued, based on findings by the FDIC that it had reason to believe that respondent had engaged in unsafe and unsound practices. (This order was terminated by order of the FDIC dated 1-17-02; see ¶16,299.)
   [.1] Bank Secrecy Act—Compliance

In the Matter of
FIRST MOUNTAIN BANK
BIG BEAR LAKE,CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE
AND DESIST

FDIC-98-050b

   First Mountain Bank, Big Bear Lake, California ("Bank"), having been advised of its right to a Notice of Charges and of Hearing detailing an unsafe or unsound banking practice and violation of law and/or regulation alleged to have been committed by the Bank and of its right to a hearing on the alleged charge under Section 8(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. {{3-31-02 p.C-4554}}§ 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 May 27, 1998, whereby solely for the purpose of this proceeding and without admitting or denying the alleged charge of an unsafe or unsound banking practice and violation of law and/or regulation, 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 an unsafe or unsound banking practice and had committed a violation of law and/or regulation. 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 practice and violation of law and/or regulation:

       (a) operating in violation of Section 326.8(c)(2) of the Rules and Regulations of the Federal Deposit Insurance Corporation, 12 C.F.R. § 326.8(c)(2), as more fully described on Pages 31 and 35 of the FDIC's Report of Examination as of January 12, 1998.
   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 comply in all material respects with the Bank Secrecy Act and its rules and regulations. Such compliance shall include, but is not limited to, taking the following measures:
   (a) to eliminate and/or correct the violation of the Bank Secrecy Act as cited in the FDIC's Safety and Soundness Report of the Bank as of January 12, 1998;
   (b) to independently test for compliance with the BSA and 31 C.F.R. Part 103. The independent testing should be conducted on an annual basis 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. The testing, at a minimum, should include the following:

       (i) a test of the Bank's internal procedures for monitoring BSA;
       (ii) a sampling of large currency transactions followed by a review of the currency transaction report filings;
       (iii) a test of the validity and reasonableness of the customer exemptions granted by the Bank;
       (iv) a test of the Bank's recordkeeping system for compliance with the BSA;
       (v) documentation of the scope of the testing procedures performed and the findings of the testing. Written reports should be prepared which document the testing results and provide recommendations for improvement and shall be presented to the Bank's Board of Directors and noted in official board minutes;
   c. to maintain an internal compliance program;
   d. to maintain the means by which to detect and monitor currency transactions are not being conducted for illegitimate purposes and that there is full compliance with all applicable laws and regulations relative to such large currency transactions;
   e. to maintain the means by which to detect and monitor all other currency transactions occurring at the Bank's branches to ensure that such transactions are not being conducted for illegitimate purposes and that there is full compliance with all applicable laws and regulations relative to such other currency transactions;
   f. to maintain training to all appropriate personnel at the Bank's branches, including, but not limited to, tellers, customer service representatives, lending officers, private and personal banking officers and all other customer contact recordkeeping regulations, and established dual controls and provide for separation of duties;
   g. to maintain a position or positions within the Bank's branches responsible for the daily coordination and monitoring of compliance with all applicable rules and regulations; and
   h. to maintain for an internal review process within the Bank's branches to ensure compliance with all applicable rules and regulations, that appropriate personnel possess the requisite knowledge necessary to comply with all applicable rules and regulations, {{8-31-98 p.C-4555}}that all procedures are in writing and that such procedures are complete and accurate and that the results of the internal review are reported to senior management.
   2. The Board of Directors shall monitor and confirm the completion of actions taken by management to comply with the terms of this ORDER. The Board of Directors shall certify in writing to the Regional Director when all of the above actions have been accomplished. All actions taken by the Board of Directors pursuant to this ORDER shall be duly noted in the minutes of its meetings.
   3. Within 30 days of the end of the calendar quarter following the effective date of this ORDER, and within 30 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.
   4. Following the effective date of this ORDER, the Bank shall send to its shareholders a copy of this ORDER or a description of this ORDER in conjunction both with the Bank's next shareholder communication and with its notice and/or proxy statement preceding the Bank's next shareholder meeting. If the Bank sends its shareholders a description of this ORDER rather than a copy of it, the description shall fully describe this ORDER in all respects.
   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.
   Pursuant to delegated authority.
   Dated at San Francisco, California, this 15th day of June, 1998.

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