U.S. fines Miami-area bank over lapses linked to Ponzi lawyer

Thu Feb 25, 2016 4:29pm EST
 
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By Brett Wolf

ST. LOUIS Feb 25 (Reuters) - U.S. regulators on Thursday fined Miami-based Gibraltar Private Bank and Trust Company $4 million for lapses including a failure to report suspicious transactions linked to convicted former lawyer Scott Rothstein, who ran a Ponzi scheme that cost investors more than $1 billion.

"We may never know how that scheme might have been disrupted had Gibraltar more rigorously complied with its obligations under the law," said Jennifer Shasky Calvery, director of the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN).

The bank did not immediately respond to a request for comment.

Gibraltar "willfully" violated the Bank Secrecy Act, the primary U.S. anti-money laundering law, FinCEN said in a statement. While FinCEN had warned the bank in 2010 of its deficienies, Gibraltar did not address its non-compliance until the Office of the Comptroller of the Currency took enforcement action in 2014, it added.

Compliance lapses at the bank caused it to fail to report suspicious activity on at least 120 occasions between 2009 and 2013 in relation to transactions totaling nearly $558 million, FinCEN said.

Gibraltar agreed to pay a $2.5 million fine to the OCC and a $1.5 million penalty to FinCEN.

It is not the first bank to be penalized for compliance failures linked to Rothstein.

In 2013, a unit of Canada's Toronto-Dominion Bank was fined $37.5 million by FinCEN and the OCC for failing to uncover and report in a timely manner suspicious activities in accounts belonging to the Florida law firm where Rothstein ran his fraud.

(Editing by Randall Mikkelsen and Tom Brown)