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[¶11,884] In the Matter of First Commercial Bank (USA), Alhambra, California,
Docket No. 01-146b (1-3-02).
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 11-13-02; see ¶16,322.)
[.1] Violations of Law—Correction of Violations Required
[.2] Bank Secrecy Act—Compliance Program—Minimum Requirements
[.3] Enhanced Customer Due Diligence—Program Required
[.4] Account Holders Accorded "W-8" Tax Exempt Status—Review Required
[.5] Bank Secrecy Act—Officer, Designate
[.6] Bank Secrecy Act—Implement Policy
[.7] Board of Directors—Monitoring and Written Confirmation of Compliance
with Cease and Desist Order Required
[.8] Shareholders—Disclosure of Cease and Desist Order Required
In the Matter of
FIRST COMMERCIAL BANK (USA)
ALHAMBRA, CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-01-146b
First Commercial Bank (USA), Alhambra, California, ("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 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 January 2, 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 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:
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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 law
and/or regulation:
(a) operating in violation of sections 326.8(c) of the
Rules and Regulations of the FDIC, 12 C.F.R. §326.8(c) as more fully
described on page 21 of the FDIC's Report of Examination dated July 9,
2001; and
(b) operating in violation of sections 353.3(a)(4) and 353.3(b)
of the FDIC's Rules and Regulations, 12 C.F.R. §§ 353.3(a)(4) and
353.3(b), as more fully described on pages 21 through 23 of the Report
of Examination dated July 9, 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 from the effective date of this ORDER, the Bank shall
eliminate and/or correct the violations cited on pages 21 through 23 of
the FDIC's Report of Examination of the Bank dated July 9, 2001. In
addition, the Bank shall take all necessary steps to ensure future
compliance with the Bank Secrecy Act ("BSA") or any rules or
regulations issued pursuant thereto.
[.2]2. Within 45 days from the effective date of this Order, the Bank shall
provide for an acceptable internal compliance program, designed to,
among other things, ensure and maintain compliance by the Bank with the
BSA and related rules and regulations. The program, at a minimum,
shall:
(a) provide the means to detect and monitor all currency and
other transactions occurring at the Bank to ensure the identification
and timely reporting of known or suspected criminal violations of
federal law, suspicious transactions related to money laundering
activity, or a violation of the Bank Secrecy Act, as required pursuant
to Part 353 of the FDIC's Rules and Regulations, 12 C.F.R. Part 353;
(b) provide effective training to all appropriate personnel
at the Bank (including, but not limited to, tellers, customer service
representatives, lending officers, branch managers and all other
customer contact personnel) in all aspects of regulatory and internal
policies and procedures related to BSA and the identification and
reporting of suspicious transactions and to update the training on a
regular basis to ensure that all personnel have the most current and up
to date information. Written reports should be provided which verify
the scope, nature and frequency of the Bank's BSA training efforts.
The documentation should also describe, with specificity, the Bank's
communication methods and/or systems utilized to enhance the knowledge
of and to inform appropriate personnel of changes to and developments
in BSA regulations. In addition, the report should address how
management measures the success of the training program, how objectives
of the training program are met and how oversight of the training is
implemented amongst bank management and other bank employees that are
involved in BSA compliance measures; and
(c) provide a system for independent testing by an outside party
of its policies, procedures, and practices for compliance with the
FDIC's Rules and Regulations relating to the identification and
reporting of suspicious transactions, and a system for independent
testing of BSA compliance by Bank personnel and/or an outside party, in
accordance with section 326.8(c)(2) of the FDIC's Rules and
Regulations. 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
independent testing of suspicious activity reporting compliance should
be conducted by qualified, trained and experienced third parties, such
as independent public accountants or specialists in this subject matter
who are not affiliated with the Bank. Written reports documenting the
testing procedures performed, the testing findings, and providing
recommendations for improvement shall be presented to the Bank's Audit
Committee and noted in official meeting minutes.
[.3]3. Within 45 days from the effective date of this Order, the Bank shall
provide an acceptable enhanced customer due diligence program designed
to 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 sections 353.3(a) and (b)
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of the FDIC's Rules and
Regulations, 12 C.F.R. Part 353. The program shall provide:
(a) The means to determine the appropriate level of
enhanced due diligence necessary for those customers that the Bank has
reason to believe are conducting transactions as described in section
353.3(a)(4)(i), (ii) and/or (iii) of the FDIC's Rules and Regulations.
For those customers whose transactions require enhanced due diligence,
develop procedures to (1) determine the appropriate documentation
reasonably necessary to confirm the identity and business activities of
the customer; (2) understand the normal and expected transactions of
the customer; and (3) report suspicious activities in compliance with
existing reporting requirements set forth in the regulations of the
FDIC.
(b) For the development and implementation of appropriate guidelines
for closing accounts, particularly for accounts the Bank has determined
to be suspicious in nature where the customer is not forthcoming with
requested information that satisfactorily explains or justifies
currency and/or other account activity.
[.4]4. Within 90 days from the effective date of this ORDER, the
Board shall develop a program for reviewing the files of account
holders at the Bank who have been accorded "W-8" tax exempt
status, but who appear to hold such accounts for the benefit of third
parties (i.e., "straw accounts") and do not qualify for
"W-8" tax exempt status. The Bank shall take appropriate action
with respect to such accounts, including as appropriate: (a) removing
the "W-8" status of an account; (b) filing a Suspicious Activity
Report; (c) re-documenting an account to reflect its actual ownership;
and/or (d) closing an account.
[.5]5. Within 45 days of the effective date of this Order, the Bank shall
ensure that the BSA compliance program is managed by a qualified
officer who shall have the responsibility and necessary authority to
ensure compliance with the BSA and related matters, including, without
limitation, the identification and 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. Copies of any and all Suspicious
Activity Reports filed by the Bank shall be submitted to the Regional
Director.
[.6]6. Within 45 days of the effective date of this Order, the Bank
shall revise, adopt and implement the Bank's BSA Policy to include
provisions which implement the requirements of Paragraphs 2, 3, and 4
of this Order. The Bank's Board of Directors and senior management
shall fully implement the provisions of the revised BSA Policy. The
revised BSA Policy, and its implementation, shall be in a form and
manner acceptable to the Regional Director as determined at subsequent
examinations and/or visitations of the Bank.
[.7]7. Following the effective date of this Order, 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 to this ORDER shall be duly noted in the minutes of its
meetings.
[.8]8. 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 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 ORDER rather than a copy of it, the description shall fully
describe this ORDER in all respects.
9. 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.
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 3rd day of January, 2002.
