(This order was terminated by order of the FDIC dated
2-25-04; see ¶16,370.)
A consent order was issued, based on findings by the FDIC that it had
reason to believe that respondent had engaged in unsafe and unsound
practices.
[.1] Bank Secrecy Act—Compliance
[.2] Violations of Law—Correction of Violations Required
[.3] Bank Secrecy Act—Compliance Program—Independent Testing Required
[.4] Bank Secrecy Act—Compliance Program—Written Plan Required
[.5] Customer Due Diligence Program—Minimum Requirements
[.6] Bank Secrecy Act—Compliance—Directors' Committee to Oversee
[.7] Suspicious Activity Report—Implement Policy
[.8] Board of Directors—Meetings—Recording of Actions Required
[.9] Shareholders—Disclosure of Cease and Desist Order Required
In the Matter of
PACIFIC UNION BANK
LOS ANGELES, CALIFORNIA
(Insured State Nonmember Bank)
CONSENT ORDER
FDIC-02-055b
Pacific Union Bank, Los Angeles, CA, ("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
regulation 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
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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 ("CONSENT AGREEMENT") with counsel
for the Federal Deposit Insurance Corporation ("FDIC"), dated
March 28, 2002, 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 regulation, the Bank
consented to the issuance of an ORDER ("CONSENT 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 regulation. The
FDIC, therefore, accepted the CONSENT AGREEMENT and issued the
following:
CONSENT ORDER
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 law
and/or regulation:
(a) operating in violation of sections 326 and 353 of the Rules and
Regulations of the Federal Deposit Insurance Corporation, 12 C.F.R.
§326, 12 C.F.R. §353, as more fully described on pages 28 through
38 of the FDIC's Report of Examination of the Bank as of September 4,
2001.
IT IS FURTHER ORDERED, that the Bank, its institution-affiliated
parties, and its successors and assigns, take affirmative action as
follows:
[.1]1. Within 45 days of the effective date of this CONSENT ORDER, the Bank
shall comply in all material respects with the Bank Secrecy Act its
rules and regulations, and Part 353 of the FDIC's 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 CONSENT ORDER, the Bank
shall correct all violations of law cited on pages 28 through 38 of the
FDIC's Report of Examination of the Bank as of September 4, 2001.
[.3]3. Within 45 days of the effective date of this CONSENT ORDER, the Bank
shall provide for independent testing of compliance with the Bank
Secrecy Act, Part 353 of the FDIC's Rules and Regulations, and 31
C.F.R. Part 103. The independent testing should be conducted on an
annual basis in compliance with the procedures described in the FDIC's
"Guidelines for Monitoring Bank Secrecy Act Compliance." 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 Reports 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; and
(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.
[.4]4. (a) Within 45 days of the effective date of this CONSENT 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) Require the Bank to develop, adopt and implement a written
plan designed to ensure compliance with all provisions of the BSA.
(ii) 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
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and that there is full compliance with all
applicable laws and regulations.
(iii) 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. Compliance audits shall include all branches and written
findings of each audit shall be presented to the Board.
(iv) 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 active is taken with respect
to previously identified violations and deficiencies.
(v) 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 offices
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 criminal
activity. Training shall be updated on a regular basis to ensure that
all personnel are provided with the most current and up to date
information.
[.5]5. Within 150 days of the effective date of this CONSENT 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, Division of Supervision,
San Francisco Region (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
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.
6. Within 90 days of the effective date of this CONSENT ORDER, the
Bank shall develop, adopt and implement a written due diligence program
to monitor employee and directors accounts. 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 provide for the following:
(a) A risk focused assessment of the employee and directors
accounts of the Bank to:
(i) identify the routine and usual nature of their banking
activities; and
(ii) determine the appropriate level of enhanced due diligence
necessary for those employee or directors accounts that the Bank has
determined have unusual activity.
(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
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FDIC's Rules and Regulations, 12 C.F.R. Part 353.
[.6]7. Within 45 days of the effective date of this CONSENT ORDER, the
Board's audit committee shall oversee the Bank's compliance with BSA,
and Part 353 of the FDIC's Rules and Regulations. The committee shall
receive reports from the qualified officer appointed in paragraph
4(iv), regarding compliance with BSA, Part 353, at least monthly, and
shall report to the Board at every meeting.
[.7]8. Within 45 days of the effective date of this CONSENT ORDER, the Bank
shall establish and implement policies and procedures to advise the
Board of Significant Suspicious Activity Reports ("SAR"). At a
minimum, the Board should be advised in detail of all SAR's involving
employees, contractors, officers and members of the Board. The policies
and procedures shall also include guidelines to determine what SAR's
are significant.
[.8]9. All actions taken by the Board of Directors pursuant to this CONSENT
ORDER shall be duly noted in the minutes of its meetings.
10. Within 30 days of the end of the calendar quarter following the
effective date of this CONSENT 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 CONSENT ORDER, the
results thereof, and contemplated future actions necessary to comply.
Such reports may be discontinued when the Regional Director has
released the Bank in writing from making further reports.
[.9]11. Following the effective date of this CONSENT ORDER, the Bank shall
send to its shareholders a copy of this CONSENT ORDER or a description
of this CONSENT ORDER in conjunction both with the Bank's next
shareholders 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 CONSENT ORDER rather than a copy of
it, the description shall fully describe this CONSENT ORDER in all
respects.
This CONSENT ORDER shall become effective ten (10) days from the date
of its issuance.
The provisions of this CONSENT ORDER shall remain effective and
enforceable except to the extent that, and until such time as, any
provisions of this CONSENT ORDER shall have been modified, terminated,
suspended, or set aside by the FDIC.
Pursuant to delegated authority.
Dated at San Francisco, California, this 4th day of April, 2002.
