Wednesday, June 11, 2014


Delaware-based Bancorp Bank, one of the largest issuers of prepaid cards, has stipulated to the entry of a Consent Order, reportedly due to fatal weaknesses in the bank's BSA compliance program. Its holding company, The Bancorp. Inc., in an 8-K filing with the Securities & Exchange Commission, has disclosed that the Order, based upon a stipulation, became effective on June 5, 2014; the value of its parent's stock immediately declined 28%.

A Pennsylvania law firm is notifying investors in the bank's securities to join in a proposed class action civil suit against the bank holding company, the stated grounds being the BSA deficiencies.

The bank, pursuant to the Order, must now:

(1) Appoint a qualified BSA/OFAC officer.
(2) Revise its written BSA Compliance Program, and develop additional procedures for monitoring and reporting suspicious transactions.
(3) Perform a look-back into previous account activity.
(4) Increase training.
(5) Adopt an independent testing program, to insure adherence to better BSA standards.
(6) Strengthen internal controls.
(7) Augment Board of Directors oversight on BSA activities.

These requirements are regarded as standard for deficient BSA/AML compliance programs, but there are onerous restrictions also in the Order. Until a BSA report, by a designated third party, is filed, the bank may not:

(A) Sign or onboard new independent sales organizations.
(B) Issuing any new non-benefit related reloadable prepaid card programs.
(C) Originating any ACH transactions new merchant-related payments.

These are, in essence, total restrictions upon the bank's ability to expand its book of business, until it gets it right on compliance issues. One can only hope that the bank's leadership gets the message, because in the current law enforcement climate, they may be at risk, individually, for indictments down the road, if they fail to meaningfully raise the level of AML compliance to banking best practices, and get caught with their proverbial pants down again.

1 comment:

  1. Another US Bank commits crime and no one is charged. Throw the president and other directors in prison. Am American smokes a joint and goes to prison for 5 years but a bank commits crimes and government spanks them with a spoon.


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