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What Community Banks Can Learn from FinCEN’s $4.5M Penalty

  • by Michael Barnes
  • Jul 15, 2015

On June 15, 2015, FinCEN—an arm of the U.S. Treasury—penalized Bank of Mingo (Williamson, West Virginia) $4.5 million for willfully violating the Bank Secrecy Act (BSA). And for a small bank like Mingo—one that’s under $100 million in assets—getting hit with a $4.5 million fine is huge.

For small to mid-size banks, the Mingo compliance penalty is a telling example of how smaller banks are being affected by the trickle down of heightened regulations. If you didn’t think so before, you should realize now that FinCEN is getting serious.  

Protect Your Bank from Regulatory Crack Down  

Though Mingo’s violations were considered egregious (including anti-money laundering, customer risk-rate and aberrant activity reporting failures), it doesn’t mean that banks with a track record of compliance are safe from regulators’ scrutiny. FinCEN’s action should put the industry on alert that big banks aren’t the only ones getting looked at closely anymore—now regulators are increasing their focus on community banks, too.

And community banks need to be proactive, not reactive. The first step is getting a strong BSA/AML compliance program in place now, before it’s too late. You may think that you already have an effective program, but by the time your next examination rolls around, your current system may not be considered sufficient.   

4 Pillars of an Effective BSA/AML Compliance Program

Many banks don’t use BSA/AML monitoring software—they rely on manual reports—to help strengthen their BSA/AML compliance programs. But given the regulatory environment and the technology that exists today, that approach isn’t going to be sufficient much longer.

Incorporating these four pillars into your BSA/AML compliance program can help you build a comprehensive defense against money laundering activity:

  1. Implement a system of internal controls, which is greatly enhanced by using an automated transaction monitoring system, like CSI’s NuMonitor, to ensure ongoing compliance
  2. Appoint a designated BSA officer to be responsible for managing BSA compliance  
  3. Make sure all appropriate bank personnel are trained on meeting BSA regulations
  4. Seek independent testing of your BSA compliance using a third-party BSA/AML audit

No matter your asset size, FinCEN expects your bank to have a program in place to comply with BSA/AML. And the best strategy going forward is to incorporate these four pillars.

FinCEN Isn’t Letting Up on Small Banks

Regulatory enforcement actions aren’t letting up, and they’re never going to get less stringent than they are now. We’ve seen large fines against some of the biggest banks in the country, but Mingo is now an example of how regulations and fines are threatening community banks.

Do you know if your bank’s BSA/AML compliance program is ready to stand up to regulatory scrutiny?


With more than 20 years of industry experience, Michael Barnes is a certified anti-money laundering specialist through the ACAMS organization and a certified financial crimes specialist through the ACFCS. He is responsible for the development and product direction of NuPoint®’s NuMonitor product, as well as CSI’s Positive Pay and Recon services and other fraud initiatives.