Bank of the Orient in S.F. Hit with Anti-Laundering Order

Bank of the Orient in San Francisco has received a federal cease-and-desist order because of shortcomings in its compliance with anti-money-laundering rules.

The Federal Reserve Bank of San Francisco issued the order after exams conducted by it and the California Department of Business Oversight's division of financial institutions found that the $466 million-asset bank was not meeting AML and Bank Secrecy Act requirements, particularly in connection with its branch in Xiamen, China.

The bank did not immediately respond to a request for comment Tuesday.

Under the order, Bank of the Orient must create a new AML/BSA compliance program within 60 days that passes muster with the San Francisco Fed. The bank's board must also submit a plan for how it will strengthen oversight of compliance matters, and it will have to produce progress reports 30 days after every quarter.

Additionally, the San Francisco Fed has ordered the bank to draft a program for performing due diligence on customers, assessing the risks of customer transactions and reporting any necessary information to authorities.

Bank of the Orient further agreed to seek an independent third-party that would review account and transaction activity for high-risk customers' transactions that occurred between July 1 and Dec. 31 of 2014. The scope of this review may be extended by regulators based on the results of the initial review.

The bank named David Tai as its new president and chief executive last December.