Compliance Blog

Posted by Anthony Demangone

You don't see this every day.  The OTS recently issued civil money penalties against the former CEO and six directors of Imperial Savings and Loan Association for what appears to be violations of previously issued cease and desist orders prompt corrective action directives.  Here's one of the orders of civil money penalties against one of the former directors.  And here's the cease and desist order that the director allegedly violated.  If you want additional details on the charges against the parties, here's the notice of charges and hearings regarding the civil money penalties. 

The main thrust of the problem was the failure of the savings association to obtain an independent audit of its BSA program. They eventually got one done, but it was a day late and a dollar short, as far as the OTS was concerned. 

24. Paragraph 6 of the Order required the Board to engage a qualified third party and within ninety (90) days after the Effective Date of the Order, obtain an independent test of theAssociation’s BSA Compliance Program, including a transaction review, for the delinquent period March 1, 2006 to April 4, 2008.

25. This testing did not commence until September 23, 2009, more than a year and a half after the Effective Date.

The civil money penalty is $5,000, and the order notes that the former director may not seek or accept indemnification.  On top of that, the order notes that it, in no way, bars the government from taking any other action against this particular director. The order shows just how bad it can get when the government decides to go after a director of a financial institution.  Give the documents a quick glance.  They are a sobering reminder of how important it is to act quickly to correct deficiencies uncovered by examiners.