US Banking Regulator FDIC Hits Bank With $20,448,000 Penalty – About a Quarter of the Lender’s Total Assets

The Federal Deposit Insurance Corporation (FDIC) is penalizing a Weir, Kansas-based bank with a monetary fine equal to over a quarter of the lender’s total assets.

The US banking regulator says it has determined that CBW Bank failed to maintain an “adequate Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) compliance program” and is consequently imposing a fine of $20.448 million over the violations which occurred between December of 2018 and August of 2021.

“During the Review Period, Respondent [CBW Bank] also (1) failed to file hundreds of suspicious activity reports (SARs), (2) lacked an appropriate risk-based customer due diligence process, and (3) maintained an inadequate due diligence program for FFI correspondent accounts.”

According to the FDIC, CBW Bank’s laxity with regard to measures aimed at fighting money laundering and terrorism financing helped in generating a significant portion of its income.

“Due to the [Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) compliance] failures described above, Respondent [CBW Bank] earned millions in fee income that it otherwise would not have earned if it had maintained an adequate AML/CFT compliance program.”

According to the FDIC, most of CBW Bank’s earnings came from offering “fee-based correspondent banking services for foreign financial institutions (FFIs)” located in Africa, Central and South America, Europe and the Middle East.

Following the imposition of the civil money penalty (CMP), CBW Bank has filed a complaint against the FDIC in court.

CBW Bank says ,

“The penalty sought by the FDIC, is unreasonable and unprecedented for a bank of this size, complexity, and supervisory history. There is no justifiable basis for any CMP, let alone for one of this magnitude given the conduct at issue in this case.”

Per the US banking industry information platform, BankRegData, CBW Bank has total assets of $73.665 million.

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