On Compliance: Anti-money laundering vigilance

Anti-money laundering
Anti-money laundering

North Dade Community Development Federal Credit Union’s run-in with federal regulators and eventual demise over anti-money laundering violations offers a cautionary tale on the need for continued vigilance in complying with the Bank Secrecy Act and USA Patriot Act. In reporting its investigation and resulting $300,000 fine, the Financial Crimes Enforcement Network charged that the $3 million credit union had exposed the U.S. financial system to significant risks of money laundering and terrorist financing from high-risk countries in the Middle East and Central America.

North Dade Community Development FCU was liquidated in 2015 by the National Credit Union Administration as a result of the violations. The credit union had been contracted to provide services to 56 money service businesses in high-risk areas. It handled almost $2 billion in financial transactions for those MSBs and in the process failed to comply with anti-money laundering and counter-terrorist financing obligations to verify clients, file reports, undertake risk assessments, report suspicious transactions and maintain robust controls to mitigate associated risks.

This case serves as a warning to credit unions that they must monitor clients and related businesses rigorously and cannot rely on third parties to conduct due diligence and comply with AML requirements.

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