Regulators order Central Pacific to monitor large transactions
Central Pacific Financial Corp., Hawaii's fourth-largest bank by assets, agreed to a cease-and-desist order with regulators after they found the company's ability to monitor large currency transactions deficient.
The order, issued by the Federal Deposit Insurance Corp. and the state Division of Financial Institutions, concerns compliance with the federal Bank Secrecy Act, the Honolulu-based company said yesterday. The law is directed against money-laundering and terrorist financing, the bank said.
Bank Secrecy Act regulations were tightened after the 2001 terror attacks and now require financial institutions to monitor and report transactions of $10,000 or more. The agreement mandates Central Pacific Bank improve detection, monitoring and reporting of large transactions and other unspecified "suspicious activity." The remedies include hiring more staff and strengthening internal controls, the bank said.
"It should be observed that on a nationwide basis, Bank Secrecy regulations are being very strictly enforced, more so now than ever," said Nick Griffin, commissioner of the state Division of Financial Institutions. "Both the FDIC and other bank institutions are increasing their security in this area."
Griffin declined to comment on whether other Hawaii banks have had similar cease-and-desist orders. Mainland banks, such as Riggs National Bank on the East Coast and Wells Fargo on the West Coast have been issued the orders in the past.
"Central Pacific Bank has always taken Bank Secrecy Act regulations very seriously and is committed to full compliance," the bank's chief executive, Clint Arnoldus, said in a statement. "We expect to be able to fully comply with the order by mid-year 2007 and will seek to have the order rescinded soon thereafter."
Central Pacific Bank is required to comply in all material respects with the Bank Secrecy Act within 90 days of the order, as well as to immediately designate a competent BSA officer to implement and enforce its policies and procedures.
The agreement "has no impact on customers or the financial integrity" of the bank, the statement said.
The announcement was made after the close of trading on the New York Stock Exchange. Earlier, the company's shares fell 52 cents to $36.95. They've gained 2.9 percent so far this year.
Bloomberg News and Star-Bulletin reporter Nina Wu contributed to this report.