Tue May 24, 2011 1:21pm EDT

http://www.reuters.com/article/2011/05/24/us-financial-moneylaundering-idUSTRE74N62S20110524

ST. LOUIS, May 24 (Thomson Reuters Accelus) - A U.S. banking regulator has fined four board members of Pacific National Bank and its former chief executive for failing to correct anti-money laundering problems, an apparent sign of a new focus on individual accountability for such lapses.

The federal Office of the Comptroller of the Currency (OCC) disclosed the fines two months after regulators fined the Miami-based bank itself $7 million for failing to correct deficiencies noted in 2005 in an enforcement action.

Pacific National is a subsidiary of Ecuador's state owned Banco del Pacifico S.A. U.S. officials consider Ecuador to be deficient in its control of money-laundering and terrorism financing.

The individual fines, believed to be a first, were levied in April against Pacific National's Chairman Andres Baquerizo; Jose Baloyra, Eduardo Gross and Joaquin Urquiola -- board members who served on the institution's Bank Secrecy Act compliance committee -- and Ralph Fernandez, the bank's former chief executive officer.

Baquerizo and Fernandez were each fined $12,500 and the others were fined $8,500.

Peter Djinis, a former a federal prosecutor and a regulatory policy official at the U.S. Treasury's Financial Crimes Enforcement Network, said bank regulators have long threatened to fine bank board members or senior executives who fail to address money-laundering control problems.

This is believed to be first time they have actually done so, he said.

"I think this is highly significant and will certainly put the fear of God in them," he said. "It is one more reminder that the government considers AML (anti money-laundering) controls a very high priority."

When the OCC concluded its 2010 examination of Pacific National, it found "that the bank not only had the same deficiencies but also new deficiencies" in its AML regime, the penalty orders state. The orders hold the men personally responsible for failing to act in their official capacities to correct the failures.

Thomson Reuters Accelus reported earlier this month that the U.S. Justice Department is probing the U.S. arm of banking giant HSBC Holdings to determine whether it violated AML laws, or other federal laws, by handling bulk cash received from money-changing firms in Mexico.

The concern is that the HSBC unit may have handled money belonging to Mexican drug cartels. The source added that Justice Department investigators are planning to bring criminal charges against bank employees, where appropriate, to ensure that individuals are held accountable.