Financial Crimes Enforcement Network
Federal Deposit Insurance Corporation
New York State Banking Department
October 31, 2006
Financial Crimes Enforcement Network, Federal Deposit Insurance Corporation,
and New York State Banking Department Assess Civil Money Penalty Against
Israel Discount Bank of New York
The Financial Crimes Enforcement Network (FinCEN), Federal Deposit Insurance
Corporation (FDIC), and the New York State Banking Department (NYSBD) today
announced the assessment of civil money penalties of $12 million against Israel Discount
Bank of New York for violations of federal and state anti-money laundering laws and
regulations. This is in addition to the $8.5 million already paid to the New York District
Attorney's Office pursuant to an agreement reached with the bank in December 2005.
Israel Discount Bank of New York, without admitting or denying the allegations,
consented to payment of the civil money penalties.
In taking these actions, FinCEN, FDIC, and NYSBD determined that Israel Discount
Bank of New York failed to implement an adequate Bank Secrecy Act/anti-money
laundering program, with internal controls and appropriate measures to detect and report
money laundering and other suspicious activity in a timely manner. The agencies found
that the deficiencies in the Bank Secrecy Act/anti-money laundering program included
failure to establish appropriate, specific due diligence policies, procedures and controls
reasonably designed to detect and report instances of money laundering through its
correspondent accounts for non-U.S. persons, as required by section 312 of the USA
PATRIOT Act and its implementing regulations.
"This joint civil money penalty is an example of extremely effective collaboration
among federal and state agencies," said FDIC Chairman Sheila C. Bair. "The significant
penalty assessed in this case emphasizes the importance for banks of having strong
internal controls to assure compliance with anti-money laundering regulations and to
detect and report potential money laundering or other illicit financial activities."
"I am very pleased we were able to reach a settlement in this case," said New York State
Superintendent of Banks, Diana L. Taylor. "The size of the settlement should serve as a
reminder to all financial institutions that detecting and reporting violations of Bank
Secrecy Act and anti-money laundering regulations is necessary if we are to keep our
financial system free from fraud and abuse."
"To be effective in combating illicit finance, federal and state agencies depend on our
partners in the banking industry," noted FinCEN Director Robert W. Werner. "A solid
anti-money laundering program not only enables banks to protect themselves, but also
serves to generate information on illegal activity that can be used for investigative and
regulatory purposes. When a program is deficient we have lost valuable data that may
have been crucial to the protection of other institutions and individuals."
Copies of the agencies' enforcement actions are attached.