Treasury fines 1st National $950,000 Bank penalized for unreported transactions.

March 04, 1992|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

First National Bank of Maryland was hit with a $950,000 fine yesterday by the U.S. Treasury, which said that the state's second-biggest bank has failed to report more than 100 cash transactions of $10,000 or more to the federal government, as required by law.

The Treasury said regulators found no evidence of criminal wrongdoing by First National or the three customers who were involved in the cash transactions.

The Bank Secrecy Act, designed to fight money laundering by criminals, requires banks to report most cash transactions of $10,000 or more to regulators.

First National said the failure to report the transactions was "an honest error of judgment on the part of the bank" and that it has worked with the Treasury Department to strengthen its training and compliance programs to avoid any recurrence.

"While we had a program in place at the time which we believed met the requirements of the act, it obviously had weaknesses," said Carol E. Dunsworth, vice president of the bank, a unit of First Maryland Bancorp. "We have cooperated fully with the Treasury Department throughout this inquiry because we are genuinely committed to the important purposes of the Bank Secrecy Act."

The Treasury Department said the violations occurred between 1987 and January 1989. Treasury spokeswoman Anne Kelly Williams said the problems were found during a routine bank examination by the Office of the Comptroller of the Currency, a division of the department that oversees federally chartered banks.

Ms. Williams said that under the law, banks may choose not to report cash transactions from some types of businesses that are known to do much of their business in cash. She cited bars and restaurants as examples. Other businesses can be exempted with permission from the Treasury.

"The bank made a mistake somewhere along the way in the process," she said. "People who shouldn't have been exempt, they made exempt."

Neither Ms. Dunsworth nor Ms. Williams identified the three customers. But Ms. Williams said they were legitimate businesses not believed to have been involved in criminal activity.

The Bank Secrecy Act allows fines of up to $100,000 per violation, Ms. Williams said, so First National fine could have been much larger. The department settled for a smaller fine because the bank put new programs in place to stop further problems and cooperated with Treasury's probe, she said.

"These substantial penalties will send a strong message to financial institutions," said Peter K. Nunez, assistant secretary for enforcement at the Treasury Department.

"These institutions have a critical responsibility to implement effective programs that ensure maximum compliance with the Bank Secrecy Act and to guard against potential exploitation by money launderers."

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