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[¶11,870] In the Matter of California Center, Los Angeles, California, Docket No.
01-181b (11-30-01).
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 4-9-02; see ¶16,310.)
[.1] Bank Secrecy Act—Compliance
[.2] Bank Secrecy Act—Correction of Violations Required
[.3] Bank Secrecy Act—Compliance Program—Minimum Requirements
[.4] Customer Due Diligence Program—Minimum Requirements
[.5] Shareholders—Disclosure of Cease and Desist Order Required
In the Matter of
CALIFORNIA CENTER BANK
LOS ANGELES, CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-01-181b
California Center 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 violation of laws
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 November 28, 2001, whereby
solely for the purpose of this proceeding and without admitting or
denying the alleged charges of unsafe or unsound banking practices and
violation of laws 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 laws and/or regulations. The
FDIC, therefore, accepted the CONSENT AGREEMENT and issued the
following:
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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 violations of laws
and/or regulations:
(a) operating in violation of section 208.63 of Regulation H of the
Board of Governors of the Federal Reserve System ("Board of
Governors"), 12 C.F.R. §208.63, as more fully described on pages
5, 5(1) and 5(2) of the Board of Governors' Report of Examination of
the Bank as of December 31, 2000.
IT IS FURTHER ORDERED, that the Bank, its institution-affiliated
parties, and its successors and assigns, take affirmative action as
follows:
[.1]1. Upon the effective date of this ORDER, the Bank shall comply in all
material respects with the Bank Secrecy Act ("BSA") and its rules
and regulations. In addition, the Bank shall take all necessary steps
to ensure future compliance with all applicable laws and regulations.
[.2]2. Within 45 days of the effective date of this ORDER, the Bank shall
correct all violations and deficiencies related to compliance with the
BSA and Regulation H of the Board of Governors cited in the Board of
Governors' Report of Examination of the Bank as of December 31, 2000,
as well as any other uncorrected deficiencies.
[.3]3. (a) Within 45 days of the effective date of this ORDER, the Bank
shall develop, adopt and implement a written plan designed to ensure
compliance with all provisions of the BSA. Such plan and its
implementation shall be in a form and manner acceptable to the Regional
Director of the FDIC's San Francisco Regional Office ("Regional
Director") as determined at subsequent examinations and/or
visitations of the Bank.
(b) Within 45 days of the effective date of this ORDER, the Bank shall
develop, adopt and implement a written compliance program, as required
by the applicable provisions of section 326.8 of the FDIC's Rules and
Regulations, 12 C.F.R. §326.8, designed to, among other things,
ensure and maintain compliance by the Bank with the BSA and the rules
and regulations issued pursuant thereto. The program shall ensure that
clear and comprehensive BSA compliance reports are provided to the
board on a monthly basis. Such program and its implementation shall be
in a manner acceptable to the Regional Director as determined at
subsequent examinations and/or visitations of the Bank. At a minimum,
the program shall:
(i) Establish a system of internal controls to ensure compliance
with the BSA and the rules and regulations issued pursuant thereto,
including policies and procedures to detect and monitor all
transactions to ensure that they are not being conducted for
illegitimate purposes and that there is full compliance with all
applicable laws and regulations.
(ii) Provide for independent testing of compliance with all applicable
rules and regulations related to the BSA and the reporting of
suspicious transactions required to be reported pursuant to Part 353 of
the FDIC's Rules and Regulations, 12 C.F.R. Part 353, and ensure that
compliance audits are performed at least annually, are fully
documented, and are conducted with the appropriate segregation of
duties.
(iii) Ensure that the Bank's BSA compliance program is managed by a
qualified officer who shall have responsibility for all BSA compliance
and related matters, including, without limitation, (A) the
identification of timely, accurate and complete reporting to law
enforcement and supervisory authorities of unusual or suspicious
activity or known or suspected criminal activity perpetrated against or
involving the Bank, and (B) monitoring the Bank's compliance and
ensuring that full and complete corrective action is taken with respect
to previously identified violations and deficiencies.
(iv) Provide and document training by competent staff and/or
independent contractors of all board members and all appropriate
personnel, including, without limitation, tellers, customer service
representatives, lending officers, private and personal banking
officers and all other customer contact personnel, in all aspects of
regulatory and internal policies and procedures related to the BSA,
with a specific concentration on accurate recordkeeping, form
completion and the detection and reporting of known and/or suspected
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criminal activity. Training shall be updated on a regular basis to
ensure that all personnel are provided with the most correct and up to
date information.
[.4]4. Within 45 days of the effective date of this ORDER, the Bank shall
develop, adopt and implement a written customer due diligence program.
Such program and its implementation shall be in a manner acceptable to
the Regional Director as determined at subsequent examinations and/or
visitations of the Bank. At a minimum, the customer due diligence
program shall provide for the following:
(a) A risk focused assessment of the customer base of the Bank to:
(i) identify the categories of customers whose transactions do
not require monitoring because of the routine and usual nature of their
banking activities; and
(ii) determine the appropriate level of enhanced due diligence
necessary for those categories of customers that the Bank has reason to
believe pose a heightened risk of illicit activities at or through the
Bank.
(b) For those customers whose transactions require enhanced due
diligence, procedures to:
(i) determine the appropriate documentation necessary to confirm
the identity and business activities of the customer;
(ii) understand the normal and expected transactions of the customer;
and
(iii) reasonably ensure the identification and timely, accurate and
complete reporting of known or suspected criminal activity against or
involving the Bank to law enforcement and supervisory authorities, as
required by the suspicious activity reporting provisions of Part 353 of
the FDIC's Rules and Regulations, 12 C.F.R. Part 353.
5. 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 shall include a copy of the Bank's last Report
of Condition and the Bank's Report of Income. 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.
[.5]6. Following the effective date of this ORDER, the Bank shall send to
its shareholders or otherwise furnish a description of this ORDER in
conjunction with the Bank's next shareholder communication and also in
conjunction with its notice or proxy statement preceding the Bank's
next shareholder meeting. The description shall fully describe the
ORDER in all material respects. The description and any accompanying
communication, statement, or notice shall be sent to the FDIC,
Registration and Disclosure Section, 550 - 17th Street, N.W.,
Washington, D.C. 20429, at least fifteen (15) days prior to
dissemination to shareholders. Any changes requested to be made by the
FDIC shall be made prior to dissemination of the description,
communication, notice, or statement.
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 30th day of November, 2001.
