OCC Announces April 2024 Enforcement Actions: Crackdown on Banking Practices

The Office of the Comptroller of the Currency (OCC) has wielded its enforcement arm with vigor in April 2024, issuing a slew of actions against national banks, federal savings associations, and individuals affiliated with these institutions. These measures underscore the OCC's commitment to ensuring the soundness, compliance, and integrity of the banking sector.

Actions Against Banks:

1. Formal Agreement with First FS & LA of Lorain: The Lorain, Ohio-based bank faces repercussions for a range of deficiencies, including inadequate strategic planning, liquidity and interest rate risk mismanagement, and failures in Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) controls. The OCC demands corrective action to rectify these lapses.
2. Cease and Desist Order against Heritage Bank, N.A.: In Spicer, Minnesota, Heritage Bank, N.A. finds itself under the OCC's scrutiny for various unsafe practices, particularly concerning capital adequacy, strategic planning, and credit portfolio monitoring. The OCC has also terminated a prior agreement, replacing it with a cease and desist order.
3. Formal Agreement with Minnstar Bank, N.A.: Lake Crystal, Minnesota's Minnstar Bank, N.A. is compelled to address numerous lapses, including credit concentration, inadequate underwriting practices, and violations of lending limits and appraisals regulations. The OCC demands swift action to rectify these shortcomings.

Actions Against Institution-Affiliated Parties (IAPs):

1. Norman Desembrana, Former Operations Senior Manager at Wells Fargo Bank: Desembrana faces a civil money penalty of $40,000 for concealing a backlog of unprocessed customer checks at a Philadelphia lockbox facility.
2. Gary Judd, Former Chairman and CEO of Sterling Bank and Trust, FSB: Judd has been penalized $300,000 for failure to oversee the bank's Advantage Loan Program adequately.
3. Scott Seligman, IAP of Sterling Bank and Trust, FSB: Seligman faces a hefty civil money penalty of $400,000 for his role in the poor compliance culture and pressuring bank employees to expedite loan underwriting.
4. Jackie M. Snider, Former Assistant Vice President at Vision Bank, N.A.: Snider is slapped with a prohibition order for misappropriating funds from customers' accounts at a Sulphur, Oklahoma branch.

Criminal Conduct Prohibition Orders:

1. John Edmonds, Former Vice President at JPMorgan Chase Bank N.A.: Edmonds faces a prohibition order based on his conviction for commodities fraud and conspiracy.
2. Christian Trunz, Former Executive Director at JPMorgan Chase Bank N.A.: Trunz is subject to a prohibition order for spoofing and conspiracy convictions.

These enforcement actions highlight the OCC's vigilance in upholding banking standards and deterring misconduct. Compliance teams across the industry should take heed, recognizing the imperative of robust compliance programs. Effective measures not only mitigate regulatory risk but also safeguard institutions' reputation and financial stability. Compliance must be ingrained in the organizational culture, with continuous monitoring and adaptation to evolving regulatory landscapes. In an era of heightened scrutiny, proactive compliance is non-negotiable for financial institutions seeking to thrive in a dynamic and highly regulated environment.

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