Sat, Mar 1, 2014

http://www.northjersey.com/news/247988721_Princeton_bank_must_fix_anti-money_laundering_controls_ordered_to_stiffen_controls.html?page=all

* FDIC scrutinizes The Bank of Princeton on anti-money laundering

The Bank of Princeton, which is led by two former Bear Stearns Bank and Trust executives, is the latest New Jersey lender to be ordered by the federal government to strengthen its anti-money laundering controls and procedures.

Compliance with the 1970 Bank Secrecy Act, an anti-money laundering law, has been an issue at a number of banks recently, including several in Bergen County. The law requires U.S. banks to help the government detect and prevent money laundering by keeping records of cash transactions of more than $10,000 and reporting suspicious activity that might point to money laundering, tax evasion or other criminal acts.

According to a Jan. 29 consent order issued by the Federal Deposit Insurance Corp. and made public Friday by the regulator, The Bank of Princeton has drawn scrutiny over weakness in its Bank Secrecy Act compliance and has been ordered to do a "look back" review of all transactions going back to Jan. 1, 2011, to determine if suspicious activity was properly identified and reported.

The bank's internal controls for the monitoring of cash transactions, international and domestic wire transfers and automated clearing house and ATM transactions must be revised, and board supervision must be enhanced, the order said.

Complying with order

The nine-branch bank, with about $870 million in assets since opening in 2007, agreed to comply with the order "without admitting or denying any charges of unsafe or unsound banking practices or violations of law or regulation."

The enforcement action is one of the latest examples of the government cracking down on banks for not being vigilant enough in detecting and reporting suspicious activity.

Citizens Community Bank in Ridgewood, which failed in 2009, was hit the year before with a cease-and-desist order that required upgrades of lending and anti-money-laundering programs.

Saddle River Valley Bank paid $8.2 million in civil penalties last year related to a failure to adequately monitor unusually large volumes of wire transfers from customers in Mexico.

Meanwhile, the Federal Reserve Bank of New York's concerns about M&T Bank Corp.'s anti-money laundering controls has delayed that bank's plans to buy Paramus-based Hudson City Bancorp.

The FDIC's January enforcement actions also included a consent order targeting Community First State Bank in Somerset's anti-money laundering defenses.

As is typical, none of these enforcement actions say if any money laundering actually occurred, and a spokesman for the FDIC said the agency does not comment on its enforcement actions.

The Bank of Princeton's president, Edward J. Dietzler, a former managing director at Bear Stearns Bank and Trust in Princeton, did not respond Friday to a request for comment, nor did Chief Financial Officer Michael J. Sanwald, who was CFO of Bear Stearns Bank and Trust. Dietzler joined The Bank of Princeton in 2009 and Sanwald followed in 2011.

The 14-page consent order also requires the bank to enhance its policies and procedures used to learn about who their customers are and what they do, to determine whether they are high or low risk for money laundering. The bank must also establish a program to test its compliance with money laundering laws as well as U.S. government sanctions on foreign countries and individuals.