OCC Mandates “Clear Fork Bank” to Strengthen BSA/AML Practices

The Office of the Comptroller of the Currency (OCC) has issued a cease-and-desist order against Clear Fork Bank, which has failed to comply with provisions of the Federal Deposit Insurance Act, as amended, 12 U.S.C. § 1818(b).

OCC monitors the operations of national banks and is authoritative to take enforcement actions against banks that don’t follow federal banking compliance regulations & laws.

Clear Fork Bank has 6 branches & $845 million of assets. Upon investigation in 2023, the OCC found that the bank didn’t address previously mentioned issues, including those outlined in a 2021 Formal Agreement with the OCC.

It is further investigated that banks failed to comply with related Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) from 2022 to 2023, engaged in unsafe practices and third-party payment processor oversight, according to an OCC press release.

The bank has been ordered to cease and desist from the identified violations & to take relevant actions to rectify the problems raised by OCC.

For this purpose, the bank was advised to implement a comprehensive compliance program, strengthen its suspicious activity monitoring system & improve the customer due diligence(CDD) process.

OCC Mandates Board to Appoint Compliance Committee

OCC mandates that the board will appoint a compliance committee of 3 members – independent directors who are not employed by the bank, by October 15, 2024.

Within 10 days of their appointment, the names of the committee members or any updates should be reported to the Assistant Deputy Comptroller in writing.

The Committee Will Provide Quarterly Progress Reports

The committee will submit a written report to the board that should include a detailed description, summary, status & results of the corrective actions, by 30 January 2025 or within 30 days at the end of every quarter.

Upon receiving each progress report, the board has to forward a copy to the Assistant Deputy Comptroller within 10 days of its initial review.

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Obligations Under The Bank Secrecy Act

OCC mandates that the board should review & revise the written program to ensure bank compliance with BSA within 60 days of the date of this order.

The program should contain:

• Procedures for evaluating AML/BSA compliance risks from new business, and to implement measures to manage risks before offering new products and services, or engaging in business.
• Must address measures mentioned in the formal agreement of February 2021 for EDD, CDD, and third-party payment processors.

Identify, Evaluate, and Report Suspicious Activities

OCC has ordered Clear Fork Bank to implement a written program within 60 days of the date of this order to monitor & report suspicious activities.

“Suspicious Activity Review Program” will ensure timely assessment, identification & revolution of unusual activities. The program will also mandate the filing of SARs as needed by 12 C.F.R. § 21.11 and 31 C.F.R. § 1020.320.

OCC has directed the bank to comply with the FFIEC BSA/AML Act for detailed program implementation guidelines.

The board is responsible for executing annual reviews of the program’s effectiveness, with the option for more reviews if mandated by OCC. Thereby, the board is authorized to amend the program as directed by OCC.

Rules Included In SAR Look-Back

The bank has been ordered to review suspicious activity investigation, monitoring & reporting of third-party payment processor accounts. Within 45 days of this order, the bank should submit a written plan for review to the Assistant Deputy Comptroller.

The Deputy Comptroller will review the plan & provide a written determination before the review can proceed.

The review “SAR look-back” identifies any previously unreported suspicious activity & ensures the accuracy of past SAR filings.

SAR look-back will concentrate on from October 1st, 2022, to January 5, 2025:

• Activity flowing through the bank’s third-party payment processor portfolio.
• Business accounts not previously reviewed by the bank’s third-party reviewer.
• SARs can be filed at any time to verify authenticity & adherence to the filing process.

OCC reserves the right to broaden the scope of SAR look-back, such as time & subjects. Any expanded review should be conducted with the requirements mentioned in the original order.

According to the OCC press release, the bank will maintain all supporting materials related to this review & provide them to OCC upon request.

Further, the order emphasizes that it’s not a binding contract & that no inducements were made to the bank to its issuance consent. All plans & reports submitted to OCC should be emailed to the designated official.

Lastly, the order terms are final & can’t be modified by any prior arrangements & agreement between parties.