Popular Bank fined $2.3 million for fraudulent PPP loans

The Board of Governors of the Federal Reserve System have assessed a $2,257,132 civil money penalty on Popular Bank, New York, NY, for unsafe or unsound practices.

In August 2020, the bank processed and funded six Paycheck Protection Loans totaling about $1.1 million, despite having detected that the loan applications contained significant indicia of potential fraud, and did not timely report the risk of potential fraud to the SBA, demonstrating ineffective controls and procedures that resulted in violations of the bank's internal BSA protocols, which constitutes unsafe or unsound practices.

The loans proved to be fraudulent, and the bank has sustained a loss on each loan.