"The Rise and Fall of BPI, Inc.: Financial Services and Regulatory Challenges"

BREIF INTRO: BPI, Inc. was a financial services company offering currency exchange, money transfers, and payment processing. It was known for reliable, secure services but ceased operations in March 2014 after FinCEN imposed a $125,000 penalty for failing to comply with Bank Secrecy Act regulations.

WHAT WENT WRONG?

1. INADEQUATE AML PROGRAM: BPI was required to implement an AML program but failed to meet three of the four key standards. Its internal controls were inadequate, it didn't retain necessary identification for large transfers, and its AML manual wrongly suggested that filing SARs was voluntary, leading to none being filed before the 2011 IRS examination. Despite previous warnings in 2005 and 2006, BPI did not correct these issues, resulting in repeated AML violations.

2. LACK OF TRAINING AND INDEPENDENT TESTING: BPI failed to provide adequate training, leading to employees' inability to identify suspicious activities or meet BSA record-keeping requirements. This resulted in unreported suspicious transactions during the 2011 BSA examination, with employees accepting expired IDs. Despite warnings since 2005, BPI did not address these issues and neglected independent testing of its AML program for over three years. Consequently, BPI repeatedly violated BSA/AML requirements.

3. UNFILED SAR’s: The BSA required MSBs to report transactions of $2,000 or more that were suspicious, involving possible illegal activity or attempts to evade regulations. During the 2011 BSA examination, 25 suspicious transactions or patterns of transactions were identified for which BPI failed to file (SARs). Before this examination, BPI had never filed a SAR. Afterward, BPI agreed with the assessment of 18 of these transactions and filed the required SARs.

CIVIL MONEY PENALTY: The Financial Crimes Enforcement Network had determined that a civil money penalty in the amount of $125,000 is warranted for BPI, Inc violations of the Bank Secrecy Act.

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

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For more information, contact us at:

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Email: haris@fpmamlcheck.com