PA bank complicit for not filing SARs


News

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When news broke in 2009 that two Pennsylvania judges had been running a lurid convictions-for-kickbacks scheme in their juvenile courtrooms, the state and the nation were stunned—and horrified that juveniles had been incarcerated without cause in order to line the pockets of juvenile-court judges. These two judges in 2000 had entered into a secret agreement with a developer to invest in a private detention center—and then for nearly a decade they systematically and aggressively railroaded juveniles through their courts and into detention centers for millions of dollars in kickbacks.

Both judges were convicted and sentenced to prison terms in 2009, but late last month FinCEN closed the loop and levied a $1.5 million civil penalty against one of the banks that ignored a multitude of red flags in the customer account of Judge Michael Conahan and did not file a single SAR.

According to FinCEN, First National Community Bank (FNCB) of Dunmore, Pennsylvania, willfully violated the Bank Secrecy Act in its failure to file SAR reports. And not only was Conahan a customer, he was on FNCB’s board of directors and controlled accounts at FNCB through which he processed the proceeds of his illegal activity.

“The criminal case affected the lives of thousands of children and parents,” noted FinCEN Director Jennifer Shasky Calvery. “Banks have a duty to spot suspicious activity and to report it. Law enforcement relies on this valuable information. FNCB’s failure to file timely suspicious activity reports may have deprived law enforcement of information valuable for tracking millions of dollars in related corrupt funds.”

According to FinCEN, these red flags included “(1) a 2007 law enforcement subpoena for information related to Conahan and other individuals and entities – although the Bank responded to the subpoena, it did not conduct any further analysis or risk rate the accounts as required; (2) activity occurring as early as 2005 involving many large, round-dollar transactions often occurring on a single day; and (3) an abnormal volume of activity compared to account balances.”

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