FDIC hits Pacific City with stronger reg order for BSA compliance

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Pacific City Financial in Los Angeles has been issued a consent order tied to Bank Secrecy Act and anti-money-laundering compliance.

The $1.7 billion-asset company disclosed in a press release Friday that its bank had entered into the agreement with the Federal Deposit Insurance Corp. and the California Department of Business Oversight. Regulators said the bank had not addressed concerns with its BSA/AML program that were raised in a January 2018 informal agreement.

The regulators said the bank had failed to have a qualified individual serve as its BSA compliance officer. The bank also failed to make sure adequate resources were provided to administer an effective BSA/AML compliance program.

The order requires the bank to correct all violations found in the prior examination and to improve the process for identifying and monitoring accounts and transactions that pose a greater-than-normal risk to BSA/AML compliance. The bank's board must also increase oversight of compliance with BSA/AML rules and regulations. Finally, the compliance program must be managed by a qualified officer.

Pacific City said it hired Susan Wahba as its new BSA officer in March. Wahba, a former bank examiner and BSA/AML trainer for the FDIC, recently served as chief risk officer at Grandpoint Bank, according to her LinkedIn profile.

The bank must also seek regulatory approval before opening branches or introducing new delivery channels, products, services or business lines.

Pacific City said it will incur additional noninterest expense tied to implementing the corrective actions, though some were already incurred and reflected in last year's financial statements. A majority of ongoing expenses were reflected in the bank's 2019 and future budgets.

The bank said the order will not have a material impact on its financial position.

The order will remain in effect until terminated, modified or suspended by the regulators.

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