"First National Community Bank’s Services and Penalties: A $1.5 Million Fine for Non-Compliance"

BREIF INTRO: Founded in 1910 in Northeastern Pennsylvania, First National Community Bank (FNCB) provided a range of banking services, including personal and business accounts, loans, and investments. Known for its community-oriented approach, FNCB focused on personalized service and strong local relationships. By then, it had grown into a significant community bank with around $1 billion in assets and 19 branches.

WHAT WENT WRONG?

UNREPORTED RED FLAGS: In 2011, a federal district court in Pennsylvania sentenced Michael Conahan to 17.5 years in prison and ordered him to pay $874,000 in restitution for taking over $2.6 million in illegal payments related to a scheme involving juvenile detention centers. Conahan exploited his judicial position to profit by sending juveniles to detention facilities in which he had a financial stake. He used his FNCB accounts to disguise these illegal proceeds, which originated from Pinnacle Group of Jupiter, LLC.

On March 17, 2007, FNCB received a law enforcement subpoena for information about Conahan, former Judge Mark Ciavarella, their spouses, and related individuals. FNCB failed to properly respond to the subpoena or analyze and report the suspicious activities, despite clear indicators like large transactions and unusual income spikes. The bank only filed suspicious activity reports (SARs) after Conahan pled guilty in 2009 and under pressure from an OCC examiner, reporting about $6.3 million in suspicious activity. By that time, the accounts were mostly depleted.

CIVIL MONEY PENALTY:

FinCEN determined a $1.5 million penalty, with $500,000 to run concurrently with the penalty imposed by the OCC. FNCB was required to pay $1 million to the U.S. Department of the Treasury and $500,000 to satisfy the OCC's penalty.

LESSONS LEARNED:

Key learnings for other financial institutions:

1. Compliance Was Non-Negotiable

2. Timely Reporting Was Essential

3. Customer Due Diligence Could Not Be Overlooked

4. Effective Use of Technology

5. Regular Audits and Reviews Were Necessary

FPM AML-CHECK® offered an advanced screening solution to help financial institutions in Pakistan combat financial crimes, with a comprehensive database of domestic Politically Exposed Persons (PEPs). Recognized for excellence and endorsed by the NBFI and Modaraba Association of Pakistan, our award-winning AML solution ensured robust compliance.

For more information, contact us at:

WhatsApp: 0301-1157150 / 51

Email: haris@fpmamlcheck.com