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Tuesday, August 23, 2011

U.S. Department of Justice orders Miami-based Ocean Bank to pay $11M for willfully failing to establish an anti-money laundering program

Ocean Bank in Miami is ordered to pay $10,988,136 to the federal government in a deferred prosecution agreement to resolve charges against it for willfully failing to establish an anti-money laundering program from 2001 through June 2008.

The settlement comes after a hefty state and federal investigation nicknamed "Operation Dirty Dinero." Law enforcement agencies examined Ocean Bank's handling of several of its high-profile customers' accounts, including transactions with Mexican currency exchange houses and found that Ocean Bank failed to monitor potential money laundering activity in five accounts allegedly used to launder narcotics money.

“The bank will make a one-time payment in the amount of $10,988,136 to satisfy any penalty, forfeiture or fine that may have been pursued by the Department of Justice, the Federal Deposit Insurance Corporation and the Florida Office of Financial Regulation, and the Assessment of a Civil Money Penalty by FinCEN,’’ Ocean Bank said in a statement. The amount of the penalty represents the proceeds of illegal narcotics sales that were laundered through the five accounts.

The $11M blow to Ocean Bank, (which is in the midst of trying to raise capital to meet regulators’ requirements) will not effect its current capital position since it already accounted for the penalty in its fourth-quarter 2010 financial statements. Ocean Bank has fully cooperated with government officials and has closed all 5 of the accounts in question.  

The bank claimed that it has improved its anti-money laundering program in 2008 when it revamped its senior management and Bank Secrecy Act staffs. The bank also appointed a new Chief Executive, Chief Operating Officer, Chief Financial Officer, and heads of lending and branch administration, operations, legal, credit, human resources, and wealth management to help reduce the risk of a similar incident.  

This year, Ocean Bank has begun monitoring accounts, has invested in additional training and hired additional staff for its BSA department. It also named a new manager of the Bank Secrecy Act department, BSA officer, and a new director for BSA and Regulatory Risk.

According to the government the payment will also satisfy a $10.9 million civil penalty issued by regulators, for “serious and systemic” anti-money laundering violations. “In light of Ocean Bank’s willingness to acknowledge responsibility for its actions and omissions, its full and truthful cooperation and remedial actions taken to date, and its promised continued cooperation and remedial actions in the future, the U.S. Attorney’s Office has agreed to defer prosecution of the criminal charge in the information for 24 months,’’ the U.S. Attorney’s Office said. “If Ocean Bank fully complies with its obligations under the agreement, the U.S. Attorney’s Office agrees to dismiss the criminal information at the end of the 24 months.’’
The agreement was accepted in federal court in Miami on Monday by U.S. District Court Judge Jose Martinez.

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