Another Bank in problems with LAW..a pending merger with C1 Bank JR .. comments

U.S. Century Bank could face Bank Secrecy Act violation fines

 by Brian Bandell, Senior Reporter

U.S. Century Bank warned shareholders that regulators could levy fines for Bank Secrecy Act violations that could reduce their proceeds from a pending merger with C1 Bank.

The Doral-based bank is hoping that its sale to St. Petersburg-based C1 Bank will cure its “undercapitalized” status and salvage something for its shareholders. According to the merger agreement, which the Business Journal obtained from confidential sources, U.S. Century Bank shareholders would receive $3 million for the sale. However, that could be reduced by $500,000 should U.S. Century Bank pay a fine or penalty from regulators in excess of $400,000.

The bank’s audited financial statements from 2011 disclosed why U.S. Century Bank might be fined.

After it signed a regulatory consent order with the Federal Deposit Insurance Corp. and the Florida Office of Financial Regulation in June 2011, the bank agreed to conduct an independent review of its high risk accounts and transactions from November 2009 through July 2011. That’s because regulators found fault with the bank’s BSA and anti-money laundering compliance for those years.

“As a result of this review, the bank may be subject to potential penalties and/or fines by the FDIC, OFR and/or the Financial Crimes Enforcement Network (FinCen) for Bank Secrecy Act violations,” U.S. Century Bank stated in its audited financial report to shareholders.

Such fines can be expensive, even for smaller banks. Miami-based Ocean Bank was fined $10.9 million in 2011 for BSA violations while Miami-based Pacific National Bank was fined $7 million that same year. Some large banks have suffered BSA fines in the hundreds of millions of dollars.