Texas' Clear Fork Bank confronted for overlooking Anti-Money Laundering (AML) concerns, according to the Office of the Comptroller of the Currency (OCC)
Clear Fork Bank, a community bank based in Albany, Texas, with approximately $845 million in assets and six branch locations, has been issued a cease-and-desist order by the Office of the Comptroller of the Currency (OCC) due to deficiencies in its Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program.
The regulatory action, which was signed by the members of Clear Fork's board on October 8, 2023, reflects the OCC's focus on ensuring that even small banks maintain robust AML controls. The order requires Clear Fork Bank to remediate identified issues and enhance its internal controls, compliance management, and monitoring programs to better detect and prevent illicit activities.
The OCC's order stems from the bank's failure to implement a sufficient AML/BSA compliance program throughout at least 2022 and 2023. From at least October 2022, Clear Fork Bank was not adequately monitoring suspicious activity and filing suspicious activity reports. During a 2023 examination, the OCC discovered that the bank had not corrected a problem with its BSA/AML compliance program that the regulator had previously brought to the bank's attention.
The order cites Clear Fork Bank's violations of law and unsafe or unsound practices concerning AML/BSA. The bank must now implement processes to evaluate BSA/AML compliance risks associated with new business lines or new or altered products and services.
In response to the order, Clear Fork Bank's board has been mandated to appoint a compliance committee of at least three people within one week. The committee cannot have a majority of employees or officers of the bank or its affiliates. The names of those on the compliance committee must be submitted to the OCC within 10 days of their appointment. The compliance committee is responsible for overseeing the bank's adherence to the OCC order's provisions and submitting regular progress reports to the board, which must share those with the OCC.
The bank is also required to conduct a suspicious activity review look-back covering a 15-month period, focusing on activity from its third-party payment processor portfolio. The bank's board must revise its policies and procedures to comply with the Bank Secrecy Act (BSA).
The bank's compliance with the order is contingent on adopting, implementing, and adhering to all corrective actions identified by the OCC. The effectiveness of the corrective actions requires sufficient time for the bank to demonstrate sustained effectiveness. The OCC reserves the right to assess monetary penalties and issue enforcement actions if Clear Fork Bank fails to comply with the order.
As of now, Clear Fork Bank has not responded to the order. The bank's future actions will be closely watched as it navigates this regulatory challenge.
The OCC's order requires Clear Fork Bank to enhance its internal controls, compliance management, and monitoring programs to better detect and prevent illicit activities, which is crucial for effective business and finance operations. In response to the order, the bank's board has been mandated to appoint a compliance committee, ensuring that there is no majority of bank or affiliate employees or officers on this committee.
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