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[¶11,942] In the Matter of First Bank of Lincoln, Lincoln, Montana, Docket No.
02-029b (6-12-02).
A consent order was issued, based on findings by the FDIC that it had
reason to believe that respondent had engaged in unsafe and unsound
practices. (This order was terminated by order of the FDIC dated 9-24-02; see ¶16,318.)
[.1] Bank Secrecy ActCompliance
[.2] Bank Secrecy ActCompliance ProgramIndependent Testing Required
[.3] Bank Secrecy ActCompliance ProgramEmployee Training
[.4] Bank Secrecy ActCompliance Officer Required
[.5] Board of DirectorsProgram to Review Compliance with Consent Order
Required
[.6] ShareholdersDisclosure of Cease and Desist Order Required
In the Matter of
FIRST BANK OF LINCOLN
LINCOLN, MONTANA
(Insured State Nonmember Bank)
CONSENT ORDER
FDIC-02-029b
First Bank of Lincoln, Lincoln, Montana, ("Bank"), having
been advised of its right to a Notice of Charges and of Hearing
detailing the unsafe or unsound banking practices and violations of law
and/or regulations alleged to have been committed by the Bank and of
its right to a hearing on the alleged charges under section 8(b)(1) of
the Federal Deposit Insurance Act ("Act"), 12 U.S.C.
§1818(b)(1), and having waived those rights, entered into a
STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER ("CONSENT
AGREEMENT") with counsel for the Federal Deposit Insurance
Corporation ("FDIC"), dated May 13, 2002, whereby solely for the
purpose of this proceeding and without admitting or denying the alleged
charges of unsafe or unsound banking practices and violations of law
and/or regulation, the Bank consented to the issuance of a CONSENT
ORDER ("ORDER") by the FDIC.
The FDIC considered the matter and determined that it had reason to
believe that the Bank had engaged in unsafe or unsound banking
practices and had committed violations of law and/or regulations. The
FDIC, therefore, accepted the CONSENT AGREEMENT and issued the
following:
CONSENT ORDER
IT IS HEREBY ORDERED, that the Bank, its institution-affiliated
parties, as that term is defined in Section 3(u) of the Act, 12 U.S.C.
§1813(u), and its successors and assigns cease and desist from the
following unsafe and unsound banking practices and violations of law
and/or regulations:
(a) operating in violation of section 326.8(c)(2) and section
326.8(c)(4) of the Rules and Regulations of the Federal Deposit
Insurance Corporation, 12 C.F.R. §§ 326.8(c)(2) and (4), as more
fully described on pages 7 and 8 of the FDIC's Report of Examination
dated January 7, 2002; and
(b) operating in violation of section 103.22(d)(4) of the Rules and
Regulations of the Department of Treasury, 31 C.F.R. §103.22(d)(4),
as more fully described on pages 7 and 8 of the Report of Examination
dated January 7, 2002.
IT IS FURTHER ORDERED, that the Bank, its institution-affiliated
parties, and its successors and assigns, take affirmative action as
follows:
[.1]1. Within 30 days of the effective date of this ORDER, the Bank shall
comply in all material respects with the Bank Secrecy Act and its rules
and regulations. Such compliance
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shall include, but is not limited to,
taking the following measures:
a. eliminating and/or correcting the violations cited on pages 7
and 8 of the FDIC's Report of Examination of the Bank dated January 7,
2002, and taking such steps to ensure future compliance with applicable
laws and regulations;
[.2]b. independently testing for compliance with the Bank Secrecy Act and
31 C.F.R. Part 103. The independent testing should be conducted on an
annual basis in compliance with the procedures described in the FDIC's
"Guidelines for Monitoring Bank Secrecy Act Compliance." The
testing, at a minimum, should include the following:
(i) a test of the Bank's internal procedures for monitoring BSA;
(ii) a sampling of large currency transactions followed by a review of
the Currency Transaction Reports filings;
(iii) a test of the validity and reasonableness of the customer
exemptions granted by the Bank;
(iv) a test of the Bank's recordkeeping system for compliance with the
BSA; and
(v) documentation of the scope of the testing procedures performed and
the findings of the testing. Written reports should be prepared which
document the testing results and provide recommendations for
improvement and shall be presented to the Bank's Board of Directors
and noted in official board minutes; and
[.3]c. providing effective BSA training to management, key personnel and
other appropriate bank personnel (including, but not limited to,
tellers, customer service representatives, lending officers, branch
managers and all other customer contact personnel), by a qualified
independent consultant. Written reports should be provided, in
accordance with Paragraph 4 of this ORDER, which verify the scope,
nature and frequency of the Bank's BSA training efforts. The
documentation should also describe, with specificity, the Bank's
communication methods and/or systems utilized to enhance the knowledge
of and to inform appropriate personnel of changes to and developments
in BSA regulations. In addition, the report should address how
management measures the success of the training program, how objectives
of the training program are met and how oversight of the training is
implemented amongst bank management and other bank employees that are
involved in BSA compliance measures. Upon the receipt of a report from
Bank, FDIC will review the same and notify Bank of additional
information that it deems necessary.
[.4]2. Within 30 days of the effective date of this Order, the Bank shall
ensure that the BSA compliance program is managed by a qualified
officer who shall have the responsibility and necessary authority to
ensure compliance with the BSA and applicable rules and regulations.
[.5]3. The Board of Directors shall monitor and confirm the completion of
actions taken by management to comply with the terms of this ORDER. The
Board of Directors shall certify in writing to the Regional Director
when all of the above actions have been accomplished. All actions taken
by the Board of Directors pursuant to this ORDER shall be duly noted in
the minutes of its meetings.
4. Within 30 days of the end of the calendar quarter following the
effective date of this ORDER, and within 30 days of the end of each
calendar quarter thereafter, the Bank shall furnish written progress
reports to the Regional Director detailing the form and manner of any
actions taken to secure compliance with this ORDER and the results
thereof. Such reports may be discontinued when the corrections required
by this ORDER have been accomplished and the Regional Director has
released the Bank in writing from making further reports.
[.6]5. Following the effective date of this ORDER, the Bank shall send to
its shareholders a copy of this ORDER or a description of this ORDER in
conjunction both with the Bank's next shareholders communication and
with its notice and/or proxy statement preceding the Bank's next
shareholder meeting. If the Bank sends its shareholders a description
of this ORDER rather than a copy of it, the description shall fully
describe this ORDER in all respects.
This ORDER shall become effective ten (10) days from the date of its
issuance.
The provisions of this ORDER shall remain effective and enforceable
except to the extent that, and until such time as, any provisions of
this ORDER shall have been modified,
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terminated, suspended, or set aside by the FDIC.
Pursuant to delegated authority.
Dated at San Francisco, California, this 12th day of June, 2002.