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[¶11,854] In the Matter of Commercial Bank of New York, New York, New York,
Docket No. 01-157b (10-11-01).
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 12-11-01; see ¶16,295.)
[.1] Bank Secrecy ActCompliance
[.2] Violations of LawCorrection of Violations Required
[.3] Bank Secrecy ActCompliance ProgramMinimum Requirements
In the Matter of
COMMERCIAL BANK OF
NEW YORK
NEW YORK, NEW YORK
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-01-157-b
Commercial Bank of New York, New York City, New York
("Insured Institution"), 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 Insured Institution 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 October 8, 2001,
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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 Insured Institution 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 Insured Institution 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 Insured Institution, its directors,
officers, employees, agents, and other 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 or unsound banking practices and violations:
(a) engaging in unsafe and unsound practices and violations of
applicable Federal laws and regulations including the Bank Secrecy Act,
31 U.S.C. §§ 53115330, and 31 C.F.R. Part 103 (hereinafter
"BSA"), section 326.8 of the FDIC Rules and Regulations, 12
C.F.R. §326.8, Part 353 of the FDIC Rules and Regulations, 12 C.F.R.
Part 353, and Part 300 of the Superintendent's Regulations, 3 NYCRR
Part 300 ("Part 300"), as more fully described on pages 5 through
10 of the joint Report of Examination of the Insured Instution by the
FDIC and the New York State Banking Department as of March 31, 2000
("ROE"), including failure to:
(1) Maintain adequate policies and procedures designed to ensure
proper screening of new accounts in the private banking area;
(2) Know its customers and document such knowledge with records that
establish the customer's identity, source of wealth, net worth
expected or anticipated level of account activity, and memorialize the
substance of contacts with customers;
(3) Design and maintain processes and procedures that would be
reasonably likely to detect suspicious customer activities and provide
for the reporting of such activities to the appropriate authorities,
pursuant to 12 C.F.R. Part 353;
(4) Periodically review customer account activity with account
managers, and establish levels of expected activity, in order to be
able to assess whether particular transactions are of a consistent
nature and within expected levels;
(5) Provide comprehensive and effective know your customer and
suspicious activity training to all appropriate personnel; and
(6) Adopt and implement written policies and procedures necessary to
adequately screen, monitor and verify wire transfers and other account
transactions to assure compliance with the U.S. Department of
Treasury's Office of Foreign Assets Control ("OFAC") 31 C.F.R.
Part 500 et seq., as well as any rules and guidelines issued
or administered by OFAC.
IT IS FURTHER ORDERED that the Insured Institution, its
institution-affiliated parties, and its successors and assigns, take
affirmative action as follows:
[.1] (1) The Insured Institution shall comply in all material respects with
BSA, Part 353 and section 326.8 of the FDIC Rules and Regulations, 12
C.F.R. Part 353, §326.8, and Part 300.
[.2] (2) Eliminate and/or correct the violations of BSA, Part 353 and
section 326.8 of the FDIC Rules and Regulations, 12 C.F.R. Part 353,
§326.8, and Part 300, as cited in the ROE;
[.3] (3) Within 45 days of the date of this ORDER, submit to the
Regional Director an acceptable written Enhanced Compliance Program
designed to monitor compliance with recordkeeping and reporting
requirements of BSA. The program will require (1) the collection
and verification, prior to account opening, of documentation that
establishes account holder identity, source of wealth, net worth, and
type and expected levels of account activity, and (2) the institution
of policies and procedures that will substantially increase the
likelihood that suspicious activities will be detected, recorded,
tracked and reported to the appropriate authorities, as required by law
and regulations. At a minimum, the Enhanced Compliance Program shall
include:
(A) An effective internal compliance program and system of
internal controls pursuant to section 326.8 of the FDIC Rules and
Regulations, 12 C.F.R. §236.8;
(B) Independent testing for compliance with BSA pursuant to section
326.8 of the
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FDIC Rules and Regulations, 12 C.F.R. §326.8, using
qualified, trained, and experienced Insured Institution personnel or
outside party;
(C) Designation of a qualified individual or individuals
responsible for coordinating and monitoring day-to-day compliance with
BSA pursuant to section 326.8 of the FDIC Rules and Regulations,
12 C.F.R. §326.8;
(D) Comprehensive and effective training for appropriate personnel
pursuant to section 326.8 of the FDIC Rules and Regulations, 12 C.F.R.
§326.8. Such training shall be conducted by competent and qualified
personnel, knowledgeable in all aspects of the relevant laws,
regulations, and internal policies and procedures;
(E) Based on a risk-focused review of customers, an update and
enhancement of policies and procedures relating to the verification of
identification of account holders and the monitoring of account
transactions. The extent of account monitoring will be based on the
results of the risk review;
(F) Development and implementation of a procedure relating to
suspicious or unusual activity to ensure (1) that potential suspicious
or unusual activities, including but not limited to, currency and wire
transactions, are properly identified and reported pursuant to state
and federal regulations, and (2) that all activities of a suspicious
nature are properly logged, followed up, reviewed, and investigated;
(G) Adoption of written policies and procedures relating to the
verification and screening of accounts, wire transfers and other
account activity to ensure compliance with OFAC, 31 C.F.R. Part 500
et seq., as well as any rules and guidelines issued or
administered by OFAC.
4. The programs, plans and procedures required in this ORDER
shall be submitted to the Regional Director for review and
approval. Acceptable programs, plans, and procedures shall be
submitted within the time periods set forth in this ORDER. The Board of
Directors shall adopt the approved programs, plans, and procedures
within 10 days of approval noting such approval in the minutes and the
Insured Institution shall fully comply with them. During the term of
this ORDER, the approved programs, plans, and procedures shall not be
amended or rescinded without the prior written approval of the Regional
Director.
5. Within fifteen (15) days after the end of each quarter
following the date of this ORDER the Insured Institution shall submit a
written progress report to the Regional Director detailing actions
taken to secure compliance with this ORDER and the results of those
actions. The Regional Director may, in writing, discontinue the
requirement for progress reports or modify the reporting schedule.
The provisions of this ORDER shall be binding upon the Insured
Institution, its directors, officers, employees, agents, successors,
assigns, and other institution-affiliated parties of the Insured
Institution.
This ORDER shall be effective immediately upon 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: October 11, 2001