[¶12,302] In the Matter of Amerika Samoa Bank, Pago Pago, American Samoa, Docket No. 04-215b (10-4-04).
A cease and desist order was issued, based on findings by the FDIC that
it had reason to believe that Respondent was engaged in unsafe and
unsound practices. (This order was terminated by order of the
FDIC dated 6-3-05; see ¶16,422.)
[.10] ShareholdersDisclosure of Cease and Desist Order Required
In the Matter of
AMERIKA SAMOA BANK PAGO PAGO, AMERICAN SAMOA (Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
Amerika Samoa Bank, Pago Pago, American Samoa ("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 October 1, 2004, 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
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
(a) operating in violation of section 326.8 of the FDIC's Rules
and Regulations, 12 C.F.R. §326.8, as more fully described on page 9
in the FDIC's Report of Examination dated August 31, 2004;
(b) operating in violation of section 353.3 of the FDIC's Rules and
Regulations, 12 C.F.R. §353.3, as more fully described on
page 9 in
the FDIC's Report of Examination dated August 31, 2004; and
(c) operating in violation of section 103.27 of the Rules and
Regulations of the Department of the Treasury, 31 C.F.R. §103.22, as
more fully described on page 9 in the FDIC's Report of Examination
dated August 31, 2004.
IT IS FURTHER ORDERED, that the Bank, its institution-affiliated
parties, and its successors and assigns, take affirmative action as
[.1] 1. Within 30 days of the effective date of this ORDER, the Board shall
select a senior bank official to be the Bank Secrecy Act ("BSA")
and Anti-Money Laundering ("AML") Officer. The position shall
have a detailed job description that specifies the BSA/AML Officer's
authority to make and enforce BSA policies.
[.2] 2. Within 90 days of the effective date of this ORDER, the Bank shall
comply in all material respects with the BSA and its rules and
[.3] 3. Within 90 days of the effective date of this ORDER, the bank shall
correct all violations of law and contraventions of FDIC Statements of
Policy cited on pages 9 and 10 of the FDIC's Report of Examination
dated August 31, 2004. In addition, the Bank shall take all necessary
steps to ensure future compliance with all applicable laws and
[.4] 4. Within 90 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
Bank's Board of Directors on a monthly basis. Such program and its
implementation shall be in a 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. At a minimum, the program shall:
(a) 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.
(b) Provide for independent testing of compliance with the BSA, 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. The
independent testing shall 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,
shall include the following:
(i) a test of the Bank's internal procedures for monitoring the
(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
(v) documentation of the scope of the testing procedures performed and
the findings of the testing.
Written reports shall be prepared which document the testing
results and provide recommendations for improvement. Such reports shall
be presented to the Bank's Board of Directors.
(c) An internal audit shall be performed which includes quarterly
reviews of the BSA as required by bank policy. The internal audit shall
incorporate the following components into the BSA scope.
(i) an assessment of whether all CTRs required to be filed have
been received by the Financial Crimes Enforcement Network
(ii) a review of the appropriateness of customers on the exempt list;
(iii) a determination whether the suspicious activity monitoring system
is reasonably capable of identifying all suspicious activity.
program is managed by a qualified officer who shall have
responsibility for all BSA compliance and related matters, including,
(i) 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
(ii) monitoring the Bank's compliance and ensuring that full and
complete corrective action is taken with respect to previously
identified violations and deficiencies.
(e) 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, "Know Your
Customer" policies, 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, including information about
illicit banking practices and the latest criminal activities.
(f) The BSA/AML Officer shall attend periodic conference-based training
that covers, among other things, best practices and current BSA issues.
[.5] 5. Within 90 days of the effective date of this ORDER, the Bank shall
submit to the FDIC an acceptable enhanced customer due diligence
program. The program shall be designed to reasonably ensure the
identification of customers, particularly those bank customers with
unfamiliar identification documents. The program shall reasonably
ensure the 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 Rules and
Regulations. The enhanced customer due diligence program shall include:
(a) A risk focused assessment of the customer base of the Bank to:
(i) identify customers which are "higher risk" due to the
nature of their activities and may require increased monitoring; and
(ii) determine the appropriate level of enhanced due diligence and
monitoring necessary for those "higher risk" customers that the
Bank has reasons to believe pose a heightened risk of illicit
activities at or through the Bank. "Higher risk" customers
include money service businesses.
(b) For those customers whose transactions require enhanced due
diligence, written procedures that:
(i) specify the appropriate documentation necessary to confirm
the identity and lawful business activities of the customer;
(ii) require the documentation of the normal and expected transactions
of the customer; and
(iii) require the reporting of suspicious activities in compliance with
existing reporting requirements set forth in Part 353 of the FDIC's
Rules and Regulations.
(c) Actions to be taken when accounts are suspected of significant
illegal activity or noncompliance with FinCEN requirements including,
where appropriate, steps to close such accounts consistent with
applicable law; and
(d) Procedures for changing lower risk customer classifications to
higher risk, based upon suspicious activity monitoring processes.
[.6] 6. Within 90 days of the effective date of this ORDER, the Bank shall
review its core processing system and acquire available software-based
tools that can assist in suspicious activity monitoring.
[.7] 7. (a) Within 60 days of the effective date of this ORDER, the Bank
shall establish and implement policies and procedures to advise the
Bank's Board of Directors of Significant Suspicious Activity Reports.
At a minimum, the Board of Directors shall be advised in detail of all
Suspicious Activity Reports involving employees, contractors, officers
and directors. The policies and procedures shall also include
guidelines to determine what Suspicious Activity Reports are
(b) Within 90 days from the effective date of this ORDER, the Bank
shall develop a written suspicious activity monitoring program that is
appropriate for the size and risk nature of the institution.
intelligence gathered as a result of the enhanced "Know Your
(ii) The system must, at minimum, use software such as spreadsheets to
facilitate the review of customer transactions over extended periods of
(iii) The system must consider wire transfers and the purchase of
(iv) The system must be reasonably designed to detect structured
transactions and transactions inconsistent with customers' known legal
business activity. The system must not be limited to reviewing
transactions over $10,000.
(c) The BSA/AML Officer shall closely monitor each branch's CTR
process and procedures to ensure CTRs are prepared accurately, timely,
and in a consistent format amongst branches. Adjustments to systems,
staffing, training, and compliance monitoring procedures shall be made
by the BSA/AML Officer, as appropriate.
(d) The Bank shall perform a forensic review of cash transaction and
CTR records to ensure that:
(i) all CTRs were prepared and submitted as required; and
(ii) all CTRs were received by FinCEN.
(e) Within 60 days of the effective date of this ORDER, the BSA/AML
Officer will perform documented reviews of each exempt customer to
ensure that ineligible customers, such as money service businesses, are
[.8] 8. Following the effective date of this ORDER, the Bank's 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. The Board shall receive reports from the
qualified officer, selected in paragraph 1, regarding compliance with
the BSA and Parts 326 and 353, at least monthly, and shall report to
the Bank's Board of Directors at every meeting.
[.9] 9. Within 15 days of the end of the first quarter following the
effective date of this ORDER, and within thirty (30) days of the end of
each 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 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 and the Commissioner have
released the Bank in writing from making further reports.
[.10] 10. Following the effective date of this ORDER, the Bank shall send to
its shareholder 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,
Accounting and Securities Section, 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.
This ORDER shall become effective ten (10) days from the date of
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 4th day of October, 2004.