FinCEN and OCC assessed combined $1.5 million in civil money penalties against First National Community Bank of Dunmore, Pennsylvania in February 2015 for willfully failing to file SARs on transactions involving proceeds of a judicial corruption scheme — through accounts controlled by board director and convicted judge Michael Conahan — allowing the "kids for cash" scandal proceeds to flow undetected for five-plus years despite multiple red flags.

First National Community Bank — $1.5 Million Penalty: "Kids for Cash" Judicial Corruption Proceeds (2015)

Outcome: FinCEN and the OCC assessed combined $1.5 million in civil money penalties against First National Community Bank of Dunmore, Pennsylvania in February 2015 for willfully failing to file Suspicious Activity Reports on transactions involving the proceeds of the "kids for cash" judicial corruption scandal — in which board director and former judge Michael Conahan had processed corruption proceeds through bank accounts for over five years while the bank failed to file a single SAR.

First National Community Bank (FNCB), headquartered in Dunmore, Pennsylvania, had a board of directors that included Michael Conahan, a former Pennsylvania judge who was ultimately convicted for his role in one of the most notorious judicial corruption scandals in U.S. history. Conahan and fellow judge Mark Ciavarella were convicted of misusing their judicial positions to profit from sending thousands of juvenile defendants to for-profit detention facilities in which they had a concealed financial interest — the "kids for cash" scandal.

Conahan controlled accounts at FNCB through which he processed the proceeds of his illegal activity over a period spanning from approximately 2005 through 2009. Despite multiple red flags indicating suspicious activity — including a sitting judge and board member receiving unexplained large payments — FNCB did not file a single SAR on any Conahan-related transactions until after Conahan entered his first guilty plea in 2009, and even then only acted when directed to do so by an OCC examiner. The bank's failure to investigate and report clearly suspicious activity tied to a board member allowed corruption proceeds to flow undetected for years.

The OCC issued a cease-and-desist order in September 2010 requiring the bank to correct its BSA/AML deficiencies. The February 2015 combined FinCEN and OCC civil money penalties — $1 million to Treasury (satisfying FinCEN's $1.5 million assessment) and $500,000 to the OCC — reflected the severity of the five-year failure combined with the unique aggravating factor of the bank's failure to act on a board member's suspicious transactions.

Primary Source: FinCEN Press Release — Pennsylvania Bank Penalized for Failing to Report Judicial Corruption Suspicious Activity