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Financial Crimes
09/24/2013

NJ bank agrees to $8.2 million penalty for money laundering violations

NEWARK, N.J. – Saddle River Valley Bank agreed Tuesday to pay an $8.2 million penalty and a number of related regulatory actions to settle claims that it violated anti-money laundering laws. This case was initiated and investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the Office of the Comptroller of the Currency (OCC). The Financial Crimes Enforcement Network assisted in the investigation.

The complaint alleges that Saddle River Valley Bank failed to maintain an effective anti-money laundering program and processed transactions involving at least $4.1 million in violation of federal money laundering laws. While a joint investigation by HSI and the OCC was underway, another financial institution acquired the majority of Saddle River Valley Bank assets. The proceeds of that acquisition, plus all other assets of the bank, currently valued at approximately $9.2 million, were held pending the outcome of the investigation. The bank has agreed to settle the government’s allegations with a combined penalty of $8.2 million of the remaining $9.2 million, and has separately agreed with the OCC to cease operation and to dissolve its charter.

"Saddle River Valley Bank is being held accountable for stunning failures of oversight that led the bank to permit narcotics traffickers and others to launder at least $1.5 billion dollars," said Andrew McLees special agent in charge of HSI Newark. "HSI maintains an expertise and wealth of experience which allows us to successfully take on the complex task of identifying and seizing money that was wrongfully obtained as profits of criminal activity. It is our goal to continue to work with the financial services community to assist law abiding partners and take action on those who flaunt the laws meant to protect our nation."

According to court documents, beginning as early as 2000, numerous federal agencies, including the Department of State, the Department of the Treasury, the Federal Reserve Bank and the Internal Revenue Service, began issuing public warnings and industry advisories to U.S. financial institutions about increased money laundering threats in Mexico. Many warnings referenced money laundering risks associated with "casas de cambio," (CDCs), non-bank currency exchange businesses located in Mexico and elsewhere. Government agencies believed proceeds from narcotics sales in the United States were being disproportionately laundered and transferred through banking institutions in Mexico.

Beginning in June 2009, Saddle River Valley Bank began servicing what would ultimately become four CDCs, including three CDCs in Mexico and one in the Dominican Republic. The bank voluntarily severed its relationship with the CDCs by May 2011, but only after processing at least $1.5 billion in transactions on behalf of the CDCs. The bank’s anti-money laundering program related to the CDCs was found to be deficient in several key areas.

The bank agreed to surrender and forfeit $4.1 million to the United States to resolve the investigation conducted by HSI and the OCC. It also agreed to an assessed civil monetary penalty by the OCC of $4.1 million for the deficiencies in its anti-money laundering program, for a total penalty of $8.2 million.