Lone Star National Bank based in Texas has been fined $2 million by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) for “willfully violating” Anti-Money Laundering (AML) requirements of the Bank Secrecy Act including failing to obtain proper customer due diligence information for high-risk accounts. According to FinCEN, Lone Star failed to identify or utilize public information regarding one such customer, a Mexican bank owner, and their possible involvement in securities frauds. FinCEN stated that the Mexican bank was “moving millions of dollars through Lone Star in a manner inconsistent with the parameters of a relationship which, at the outset, required greater scrutiny” and that they have “failed to verify the accuracy of assertions by the foreign bank with respect to source of funds, purpose of the account, and expected activity.”
Lone Star ignored Section 312 of the USA PATRIOT Act which states due diligence requirements each bank must follow. In a statement made last month, Jamal El-Hindi, FinCEN’s Acting Director, stressed the importance for small banks as well as large banks to ask due diligence questions especially when opening foreign bank accounts and follow up on any inconsistencies they may find.
Although placed under a federal regulatory consent order since 2012, Lone Star has still been facing “anti-money laundering deficiencies” throughout 2012 to 2014. In 2015, Lone Star was fined $1 million by the Office of the Comptroller of the Currency, which FinCEN credited to their civil penalty total and lowered their fine from $2 million to $1 million. FinCEN also stated that Lone Star has cut ties to the Mexican account, and has hired outside help to conduct tests, customer due diligence and suspicious activity look backs.
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