Pamrapo Savings Bank of Bayonne, New Jersey pleaded guilty to conspiracy to violate the Bank Secrecy Act in March 2010 and agreed to forfeit $5 million, with a concurrent FinCEN $1 million civil money penalty, for deliberately failing to file CTRs and SARs on approximately $35 million in illegal and suspicious transactions from 2005–2009 — admitting the bank violated BSA requirements intentionally to avoid compliance expenses, and made false statements to OTS regulators to prevent oversight.

Pamrapo Savings Bank — $6 Million BSA Guilty Plea: Intentional Non-Compliance to Avoid Costs (2010)

Outcome: Pamrapo Savings Bank, S.L.A. of Bayonne, New Jersey pleaded guilty to conspiracy to violate the Bank Secrecy Act in March 2010 and agreed to forfeit $5 million — with a concurrent $1 million FinCEN civil money penalty — for deliberately failing to file Currency Transaction Reports and Suspicious Activity Reports on approximately $35 million in illegal and suspicious transactions from January 2005 through April 2009, with the bank admitting it intentionally avoided BSA compliance costs and made false statements to regulators.

Pamrapo Savings Bank, a savings institution headquartered in Bayonne, New Jersey, was found to have operated without an effective BSA/AML compliance program for at least four years. The bank admitted in its guilty plea that its BSA violations were willful — that it had deliberately chosen not to invest in adequate compliance infrastructure in order to avoid the costs associated with BSA compliance. This admission of cost-avoidance as the motive for BSA violations placed the case among the most egregious category of BSA enforcement actions.

The specific compliance failures were comprehensive: inadequate internal controls, unqualified BSA compliance personnel, effectively nonexistent BSA training, and severely deficient independent testing of the AML program. The combined result was an AML program that failed entirely to detect or report the $35 million in suspicious and illegal transactions that should have been the subject of CTRs and SARs. The bank filed neither type of report on any of these transactions during the four-year period.

Beyond the underlying BSA violations, Pamrapo made the enforcement outcome significantly worse by making false and misleading statements to bank regulators — specifically the Office of Thrift Supervision — in deliberate attempts to prevent regulatory oversight and enforcement of its BSA compliance program. This obstruction of regulators transformed what might have been a civil enforcement action into a criminal case requiring a guilty plea and $5 million forfeiture.

Primary Source: DOJ Press Release — Pamrapo Savings Bank Pleads Guilty to BSA Violations, Forfeits $5 Million