Dive Brief:

• The Office of the Comptroller of the Currency issued Albany, Texas-based Clear Fork Bank a cease-and-desist order for failing to correct previously flagged problems related to its anti-money laundering/Bank Secrecy Act compliance program, the agency said Thursday.
• Clear Fork didn’t correct BSA issues identified in 2021, the OCC said in the order, and throughout at least 2022 and 2023, the bank failed to implement a sufficient AML/BSA compliance program that would assure and monitor compliance with legal requirements.
• The order, which settles the OCC’s cease-and-desist proceedings and was signed by the members of Clear Fork’s board Oct. 8, cites the bank’s violations of law and unsafe or unsound practices concerning AML/BSA.

Dive Insight:

Clear Fork has about $845 million in assets and six branch locations. During a 2023 examination, the OCC discovered the bank hadn’t corrected a problem with its BSA/AML compliance program that the regulator had previously brought to the Texas lender’s attention.

The bank had also failed to comply with requirements from the 2021 agreement that took issue with its BSA/AML program, involving customer due diligence and suspicious activity monitoring and identification, the OCC said.

From at least October 2022, Clear Fork wasn’t adequately monitoring suspicious activity and filing suspicious activity reports, the order said. The lender “engaged in unsafe or unsound practices, including those related to BSA/AML and oversight of third-party payment processor accounts,” the order said.

Clear Fork’s board was given one week from signing the order to appoint a compliance committee of at least three people; a majority of those on the committee cannot be employees or officers of the bank or its affiliates. The board was ordered to give the names of those on the compliance committee to the OCC within 10 days of their appointment.

The compliance committee is to oversee the bank’s adherence to the OCC order’s provisions and submit regular progress reports to the board, which must share those with the OCC.

Clear Fork’s board was also ordered to revise its policies and procedures to comply with the BSA and ensure the bank adheres to them. Those include implementing corrective actions flagged in 2021, and incorporating processes to evaluate BSA/AML compliance risks that new business lines or new or altered products and services may pose and put in place controls to manage those risks beforehand.

The lender’s board also must adopt a suspicious activity monitoring and reporting program and review its effectiveness at least annually. And the bank must conduct a suspicious activity review look-back covering a 15-month period, examining activity coming from the bank’s third-party payment processor portfolio, and issue a report on it.   

The OCC reserves the right to assess monetary penalties and issue enforcement actions, and the bank’s compliance with the order hinges on its adopting, implementing and adhering to all corrective actions identified and the OCC’s validation of those, the regulator said.

“An assessment of the effectiveness of the corrective actions requires sufficient passage of time for the Bank to demonstrate the sustained effectiveness of the corrective actions,” the OCC said in its order.

Clear Fork didn’t immediately respond to a request for comment.