On April 26, 2023, FinCEN (Financial Crimes Enforcement Network) enacted its first enforcement action against a trust company. In this case, The Kingdom Trust Company (Kingdom Trust) was fined a $1.5 Million Civil Money Penalty due to BSA (Bank Secrecy Act) violations and regulation deficiencies. The Consent Order’s execution assured FinCEN’s position toward trust companies and the magnitude of the importance of having a proper compliance program in place: [1]
This enforcement action is an important statement that we will not tolerate trust companies with weak compliance programs that fail to identify and report suspicious activities, particularly with respect to high-risk customers whose businesses pose an elevated risk of money laundering
Himamauli Das, Acting Director, FinCEN
FinCEN affirmed that trust companies must:
- File SARs
- Have an adequate AML Program with appropriate compliance controls
- Maintain experienced employee staffing sufficient to monitor transaction activity
- Recognize indicia of suspicious activity when evident
The Consent Order confirmed that trust companies are required to establish, maintain and execute an AML program in a manner like the highly regulated national and local banks.
“The BSA imposes on “banks” (such as Kingdom Trust) the affirmative duty to identify and report suspicious transactions relevant to a possible violation of law or regulation in suspicious activity reports (SARs) filed with FinCEN.
How Withum Can Help
Withum’s BSA/AML Services Team assists numerous financial institutions with their regulatory compliance and risk management needs and has first-hand experience working with regulators and institutions under BSA/AML regulatory pressures, including consent orders and enforcement actions.
Learn how our team helped a Regional Bank with limited resources satisfy deficiencies in its AML program.
Our diverse team of Certified Anti-Money Laundering Specialists (CAMS) include former federal law enforcement agents, financial industry professionals, and former regulators to help you navigate the challenges you face.
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For a complimentary consultation, please contact a member of Withum’s Bank Secrecy Act / Anti-Money Laundering Services Team.
[1] 31 C.F.R. § 1020.210(b) went into effect on November 16, 2020 and required trust companies without a Federal functional regulator (including Kingdom Trust) to comply with the AML program rule.
