Our CIP policy went to the committee today in the first hurdle toward being presented to the BOD. One of the questions was what if we don't comply? I found provisions for penalties Under 31CFR103.57. Would failure to comply with CIP fall in this same area of (f) willful violation after 10/27/86 which is $100,000 to $25,000?

CIP is part of BSA - so any BSA penalties can be applied toward CIP failures.

Also, consider that the adequacy of your Anti-Money Laundering program will be considered when you file an application to acquire or merge with another institution. CIP is part of the overall AML.

I wanted to bring this back up to post another question. Has anyone had management balk at the CIP requirements? (I'm sure some have at least initially.) If so, does anyone have any materials that they wouldn't mind sharing or posting that brought home the gravity of the situation. Just gathering information just in case. Thanks in advance for anything you can provide.

We actully included this at the end of our BSA Policy that's going to the board:

Quote:

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Violations of BSA requirements may hold civil and / or criminal penalties, such as:
· Failure to maintain compliance procedures may cause the imposition of civil penalties of up to a maximum of $1000 per day for each day of noncompliance.
· A penalty of not more than $500 per violation can be imposed if the bank violates the recordkeeping or reporting requirements of the BSA.
· Willful violations of the reporting and recordkeeping requirements may cause the imposition of civil penalties in an amount equivalent to that of the transaction (up to $100,000) or $25,000, whichever is greater.
· The Money Laundering Control Act of 1986 has expanded this penalty to allow additional civil money penalties of up to $50,000 if a financial institution engages in a pattern of negligent activity.
· If a required CTR is not filed within 15 days, a $10,000-per-day civil penalty may be imposed until it is filed.
· Continued noncompliance can result in the issuance of a “Cease & Desist” order from the (insert your regulator here).
· Any individual who willfully violates the structuring provisions may be fined not more than $250,000 or imprisoned for not more than five (5) years, or both.
· Any individual who willfully violates the structuring provisions while violating another federal law, or as part of a pattern of any illegal activity involving more than $100,000 in a twelve-month period, may be fined not more than $500,000 or imprisoned for not more than ten (10) years, or both.

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Kinda drives home the importance of complying with BSA...

Thanks for the reply and the language. I may do something like this. That's the kind of "scared straight" language I was looking at.

Our regulator (OCC) requested that we include the penalty language.

Dumb question but I'm gonna ask anyway. In Tisa's post above, which penalty applies if a bank has no program/procedures in place to comply with CIP as of today?

I would say all of these:

Violations of BSA requirements may hold civil and / or criminal penalties, such as:
· Failure to maintain compliance procedures may cause the imposition of civil penalties of up to a maximum of $1000 per day for each day of noncompliance.
· A penalty of not more than $500 per violation can be imposed if the bank violates the recordkeeping or reporting requirements of the BSA.
· Willful violations of the reporting and recordkeeping requirements may cause the imposition of civil penalties in an amount equivalent to that of the transaction (up to $100,000) or $25,000, whichever is greater.
· The Money Laundering Control Act of 1986 has expanded this penalty to allow additional civil money penalties of up to $50,000 if a financial institution engages in a pattern of negligent activity.
· Continued noncompliance can result in the issuance of a “Cease & Desist” order from the (insert your regulator here).