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The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has imposed a $15 million civil money penalty on Bancrédito International Bank & Trust Corporation, a Puerto Rico-based institution, after identifying years of violations of the Bank Secrecy Act (BSA) and failures in its anti-money laundering (AML) program. The case underscores the rising pressure on banks, including those operating in U.S. territories, to maintain rigorous compliance programs and highlights the consequences of neglecting regulatory obligations in high-risk financial environments.
Between October 2015 and May 2022, Bancrédito allegedly failed to establish and maintain an adequate AML program. FinCEN’s findings included the bank’s failure to file timely Suspicious Activity Reports (SARs), which are critical to detecting and preventing illicit financial flows. In addition, the institution reportedly conducted inadequate due diligence on foreign correspondent accounts and did not implement sufficient safeguards against money laundering and terrorist financing risks.
According to FinCEN’s consent order, many of the problematic transactions involved customers and entities from Venezuela, Panama, and other high-risk jurisdictions. These transactions were processed without appropriate monitoring or escalation, which FinCEN deemed willful violations of U.S. law.
This action is notable because it represents the first enforcement case under FinCEN’s “Gap Rule.” The rule, finalized in 2020, requires certain financial institutions without a primary federal regulator—such as Puerto Rico’s International Banking Entities (IBEs)—to establish and maintain BSA/AML compliance programs. Prior to the rule, entities like Bancrédito operated in a regulatory gray area, but FinCEN has now closed that loophole, holding them accountable under federal AML standards.
As part of the settlement, Bancrédito agreed not only to pay the $15 million penalty but also to surrender its International Banking Entity license. Additionally, the bank must retain and preserve compliance-related records for at least five years, ensuring regulators can access critical information for ongoing or future investigations.
This marks a severe consequence for the bank, effectively dismantling its international banking operations in Puerto Rico. Bancrédito’s decision to settle, rather than contest the findings, reflects the immense power regulators have when institutions lack a robust compliance defense.
The penalty against Bancrédito sends a clear message to the global banking sector: weaknesses in AML and compliance programs will not be tolerated, regardless of an institution’s size or location. For Puerto Rico’s IBE sector, which has attracted international clients due to favorable tax laws and lighter regulatory oversight, the case represents a turning point. Regulators are expected to scrutinize these institutions more closely, reducing the perceived attractiveness of Puerto Rico as a hub for loosely regulated offshore banking.
For U.S. and international banks, the Bancrédito case serves as a cautionary tale. Compliance officers and executives are reminded of the importance of maintaining robust monitoring systems, independent audits, timely SAR filings, and rigorous due diligence for correspondent relationships. Failure in these areas not only risks multimillion-dollar penalties but also damages an institution’s credibility in global markets.
The fallout from the FinCEN penalty has not stopped with the settlement. Bancrédito Holding Corporation (BHC), the bank’s sole shareholder, has since filed lawsuits against its former legal counsel, alleging that poor legal advice contributed to the settlement and reputational damage. These lawsuits further complicate the narrative, potentially setting a precedent where legal advisors may be held accountable for regulatory outcomes.
Observers also note that FinCEN’s enforcement priorities are expanding. With increasing focus on cryptocurrency transactions, cross-border correspondent banking, and politically exposed persons (PEPs), regulators are expected to be more aggressive in pursuing cases similar to Bancrédito.
The $15 million fine against Bancrédito is not just a story of one bank’s failures; it is a broader warning to financial institutions worldwide. In today’s environment of heightened regulatory oversight, institutions must invest in compliance, adopt advanced monitoring technology, and ensure leadership is fully committed to risk management.
Bancrédito’s downfall illustrates the cost of non-compliance—financial penalties, regulatory intervention, reputational damage, and the ultimate loss of the ability to operate. For other banks and financial institutions, the lesson is clear: AML compliance is not optional; it is a business-critical requirement in safeguarding both reputation and survival.
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