Document:

Unassociated Document

     

    FEDERAL
      DEPOSIT INSURANCE CORPORATION

    

    WASHINGTON,
      D.C.

    
      	 	 	 
	 	)	 
	In the Matter of	)	
               STIPULATION
                AND
                CONSENT

            
	 	)	
               TO
                THE ISSUANCE
                OF

            
	EUROBANK 	)	
               AN
                ORDER TO
                

            
	HATO REY, PUERTO
              RICO	)	
               CEASE
                AND
                DESIST

            
	 	)	
               

            
	(INSURED STATE NONMEMBER
              BANK)	)	
               FDIC-07-018b

            
	
               

            	)	 

    

     

    Subject
      to the acceptance of this STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER
      TO
      CEASE AND DESIST ("CONSENT AGREEMENT") by the Federal Deposit Insurance
      Corporation ("FDIC"), it is hereby stipulated and agreed by and between a
      representative of the Legal Division of the FDIC and Eurobank, Hato Rey, Puerto
      Rico ("Insured Institution"), as follows:

    1. The
      Insured Institution has been advised of its right to receive 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 Insured
      Institution 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 has waived those rights. 

    2. The
      Insured Institution, solely for the purpose of this proceeding and without
      admitting or denying any of the alleged charges of unsafe or unsound banking
      practices and violations of law and/or regulations, hereby consents and agrees
      to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC. The
      Insured Institution further stipulates and agrees that such ORDER shall be
      deemed to be a final ORDER and that such ORDER shall become effective
      immediately upon the date of issuance by the FDIC and fully enforceable by
      the
      FDIC pursuant to the provisions of section 8(i)(1) of the Act, 12 U.S.C. §
1818(i)(1), subject only to the conditions set forth in paragraph 3 of this
      CONSENT AGREEMENT.

     

    
      
        
           

        

      

      
         

        
          

        

      

      
         

      

    

     

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      -

     

    3.  In
      the
      event the FDIC accepts this CONSENT AGREEMENT and issues the ORDER, it is agreed
      that no action to enforce such ORDER in the United States District Court will
      be
      taken by the FDIC unless the Insured Institution or any director, officer,
      employee, agent, successor or assignee, or other institution-affiliated party,
      has violated or is about to violate any provision of the ORDER.

    4.      
The
      Insured
      Institution hereby waives:

    
       

    

    (a)  the
      receipt of a NOTICE OF CHARGES AND OF HEARING;

    (b)  all
      defenses in this proceeding;

    (c)  a
      hearing
      for the purpose of taking evidence on such alleged charges;

    (d)  the
      filing of PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW;

    (e)  a
      recommended decision of an Administrative Law Judge; and

     

    
      
        
        

      

      
         

        
          

        

      

      
         

      

       

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    (f)  exceptions
      and briefs with respect to such recommended decision.

     

    Dated:      
      March 13,2007. 

     

    
      	 FDIC 	 	 	  EUROBANK
	 LEGAL
              DIVISION	 	 	 HATO REY, PUERTO
              RICO
	 	 	 	 
	 BY:	 	 	 BY:
	 	 	 	 
	/s/ G.
              Michael Saran	 	 	/s/ R.
              Arrillaga-Torrens, Jr.
	
              
G.
              Michael Saran	 	 	
              
Rafael
              Arrillaga-Torrens, Jr.
	
              Senior
                Attorney

            	 	 	Director

      	 	 	 	 
	 	 	 	 
	 	 	 	/s/ Juan
              Gomez-Cuetara, Jr.
	
            	 	 	
              
Juan
              Gomez-Cuetara, Jr.
	 	 	 	Director

    

    
      
        	
              	 	 	 
	 	 	 	 
	 	 	 	/s/ Pedro
                Feliciano Benitez
	
              	 	 	
                
Pedro
                Feliciano Benitez
	 	 	 	Director

      

    

    

      	
            	 	 	 
	 	 	 	 
	 	 	 	/s/ Placido
              Gonzalez Cordova
	
            	 	 	
              
Placido
              Gonzalez Cordova
	 	 	 	Director

      	
            	 	 	 
	 	 	 	 
	 	 	 	/s/ Luis
              Hernandez Santanta
	
            	 	 	
              
Luis
              Hernandez Santanta
	 	 	 	Director

      	
            	 	 	 
	 	 	 	 
	 	 	 	/s/ Ricardo
              Levy Echeandia
	
            	 	 	
              
Ricardo
              Levy Echeandia
	 	 	 	Director

      	
            	 	 	 
	 	 	 	 
	 	 	 	/s/ Diana
              Lopez Feliciano
	
            	 	 	
              
Diana
              Lopez Feliciano
	 	 	 	Director

      	
            	 	 	 
	 	 	 	 
	 	 	 	/s/ Antonio
              R. Pavia Bibiloni
	
            	 	 	
              
Antonio
              R. Pavia Bibiloni
	 	 	 	Director

    

     

    
      
        
        

      

      
         

        
          

        

      

      
         

      

    

     

    -
      4
      -

    
      	
            	 	 	 
	 	 	 	 
	 	 	 	/s/ William
              Torres Torres
	
            	 	 	
              
William
              Torres Torres
	 	 	 	Director
	 	 	 	 
	 	 	 	
              Comprising
                the Board of 

              Directors
                of Eurobank

              Hato
                Rey, Puerto RicoUnassociated Document

     

    FEDERAL
      DEPOSIT INSURANCE CORPORATION

    

    WASHINGTON,
      D.C.

    
      	 	 	 
	 	)	 
	In the Matter of	)	
               

            
	 	)	
               

            
	EUROBANK 	)	
              ORDER
                TO CEASE AND
                DESIST

            
	HATO REY, PUERTO
              RICO	)	
               

            
	 	)	
              FDIC-07-018b

            
	(INSURED STATE NONMEMBER
              BANK)	)	
               

            
	
               

            	)	 

    

     

    Eurobank,
      Hato Rey, Puerto Rico (“Insured Institution”), 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 Insured Institution 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 AN ORDER TO CEASE AND DESIST
      (“CONSENT AGREEMENT”) with counsel for the Federal Deposit Insurance Corporation
      (“FDIC”), dated March 19, 2007, 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 regulations, the Insured
      Institution consented to the issuance of an ORDER TO CEASE AND DESIST (“ORDER”)
      by the FDIC.

     

    The
      FDIC
      considered the matter and determined that it had reason to believe that the
      Insured Institution had engaged in unsafe or unsound banking practices and
      had
      committed violations of law and/or regulations. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    The
      FDIC,
      therefore, accepted the CONSENT AGREEMENT and issued the following:

     

    ORDER
      TO CEASE AND DESIST

     

    IT
      IS
      HEREBY ORDERED that the Insured Institution, its directors, officers, employees,
      agents and other 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 engaging in the alleged unsafe or unsound banking
      practices and committing the alleged violations of law and/or regulations
      specified below:

     

    (a)  operating
      with inadequate management supervision and oversight by the Insured
      Institution’s board of directors (“Board”) to prevent unsafe or unsound
      practices and violations of the Bank Secrecy Act, as amended, 12 U.S.C. § 1829b,
      12 U.S.C. §§ 1951-1959, and 31 U.S.C. §§ 5311-5332, and implemented by rules and
      regulations issued by the United States Department of Treasury, 31 C.F.R. Part
      103 and 12 C.F.R. Part 353, and 12 U.S.C. § 1818(s) and its implementing
      regulation, 12 C.F.R. 

    §
326.8
      (hereafter collectively referred to as “BSA”);

     

    (b)  operating
      with an inadequate BSA/Anti-money Laundering(“AML”)Compliance Program (“BSA/AML
      Compliance Program”) to monitor and assure compliance with the BSA;
      and

     

    (c)  operating
      with ineffective policies, procedures and processes to adequately screen,
      monitor and verify account transactions to ensure compliance with the
      regulations promulgated by the United States Department of Treasury’s Office of
      Foreign Assets Control (“OFAC”), 31 C.F.R. Part 500, as well as all statutes,
      regulations, rules and/or guidelines issued or administered by OFAC (“OFAC
      Provisions”).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    IT
      IS
      FURTHER ORDERED that the Insured Institution, its institution-affiliated
      parties, and its successors and assigns, shall take affirmative action as
      follows:

     

    CORRECTION
      AND PREVENTION

     

    1. Beginning
      on the
      effective date of this ORDER, the Insured Institution shall take any and all
      steps necessary, consistent with other provisions of the ORDER and sound banking
      practices, to correct and prevent the unsafe or unsound banking practices and
      violations of law and/or regulations in the FDIC's and Office of the
      Commissioner of Financial Institutions of the Commonwealth of Puerto Rico’s
      joint Report of Examination ("ROE") dated August 31, 2006, address each
      deficiency identified in the ROE and ensure that the Insured Institution is
      operated with adequate management supervision and Board oversight to prevent
      any
      future unsafe or unsound banking practices and violations of law and/or
      regulations.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    SYSTEM
      OF BSA INTERNAL CONTROLS

     

    2.  Within
      120 days from the effective date of this ORDER, the Insured Institution shall
      develop, adopt, and implement a system of internal controls designed to ensure
      full compliance with the BSA (“BSA Internal Controls”) taking into consideration
      its size and risk profile. At a minimum, such system of BSA Internal Controls
      shall include policies, procedures and processes addressing the following
      areas:

     

    (a)  Risk
      Assessment:
      The
      Insured Institution shall conduct an expanded and comprehensive BSA/AML risk
      assessment of the Insured Institution’s operations (“Risk Assessment”) taking
      into consideration its customers, their geographic locations, the types of
      accounts, products and services offered and the geographic areas in which these
      accounts, products and services are offered to enable it to stratify its
      customers, products, services and geographies by risk category and determine
      the
      Insured Institution’s overall risk profile. The Insured Institution shall
      establish written policies, procedures and processes to conduct periodic Risk
      Assessments and to adjust its stratifications and risk profile as appropriate,
      but in no event less frequently than every twelve to eighteen
      months;

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    (b)  Customer
      Due Diligence:
      The
      Insured Institution shall develop, adopt and implement written
      policies, procedures and processes to operate in conjunction with the customer
      identification program required by subparagraph (h) below for:

     

    
      	(i)  	
              establishing
                customer profiles based upon source of funds and wealth, the business
                activity, ownership structure, anticipated or actual volume and types
                of
                transactions, including those transactions involving high-risk
                jurisdictions, of that customer and determining whether the customer
                should be subject to the Insured Institution’s enhanced due diligence
                policies, procedures and processes required by subparagraph (d)
                below;

            

    

     

    
      	(ii)  	
              assigning
                risk ratings to each customer based upon their profile and the results
                of
                the Risk Assessment required by subparagraph (a)
                above;

            

    

     

    
      	(iii)  	
              maintaining
                and periodically updating customer profiles and risk ratings;
                and

            

    

     

    
      	(iv)  	
              resolving
                issues when insufficient or inaccurate information is obtained to
                appropriately establish and validate a customer profile and risk
                rating;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    (c)  High-Risk
      Account Identification and Monitoring:
      The
      Insured Institution shall adopt adequate policies, procedures and processes
      to
      identify and monitor its high-risk accounts on a transaction basis as well
      as on
      an account and customer basis; 

     

    (d)  Enhanced
      Due Diligence:
      The
      Insured Institution shall develop, adopt and implement policies,
      procedures and processes to operate in conjunction with the customer
      identification program and due diligence policies, procedures and processes
      required by subparagraphs (b) and (c) above and subparagraphs (e),(f), (g)
      and
      (h) below with respect to high-risk customers to: 

     

    
      	(i)  	
              determine
                whether additional information, such as the purpose of the account,
                source
                of funds and wealth, the beneficial owners of the account, if any,
                customer’s occupation or type of business, financial statements, banking
                references, domicile of the customer’s business, proximity of customer’s
                residence, place of employment or place of business to the Insured
                Institution, description of primary trade area of customer or beneficial
                owner and whether international transactions are expected to be routine,
                description of the business operations, the anticipated volume of
                currency
                and total sales and a list of major customers and suppliers and
                explanations for changes in account activity should be required and
                collected for that customer’s profile;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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      	(ii)  	
              determine
                whether on-site visits to collect and verify information for the
                customer
                profile are warranted and establish procedures to ensure periodic
                on-site
                visits are documented; and

            

    

     

    
      	(iii)  	
              monitor
                account activity commensurate with the level of risk and document
                the
                monitoring process on an ongoing
                basis.

            

    

     

    (e)  Account
      and Transaction Monitoring:
      The
      Insured Institution shall develop, adopt and implement policies, procedures
      and
      processes appropriate to the Insured Institution considering its size and risk
      profile (based upon the Risk Assessment) to operate in conjunction with the
      policies, procedures and processes required by subparagraphs (f),(g) and (h)
      below to monitor and aggregate currency activity, funds transfer activity,
      and
      monetary instrument sales to ensure the timely, accurate and complete filing
      of
Currency
      Transaction Reports (“CTRs”), Reports of International Transportation of
      Currency or Monetary Instruments (“CMIRs”), Reports of Foreign Bank and
      Financial Accounts (“FBARs”) and any other similar
      or related reports required by law or regulation.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    (f)  Suspicious
      Activity Monitoring and Reporting:
      The
      Insured Institution shall, taking into account its size and risk profile (based
      upon the Risk Assessment), develop, adopt and implement appropriate policies,
      procedures, processes and systems for monitoring, detecting and reporting
      suspicious activity being conducted within or through the Insured Institution.
      These policies, procedures, processes and systems should:

     

    
      	(i)  	
              collect
                and analyze data from each branch and business area of the Insured
                Institution on a centralized basis for the production of periodic
                reports
                designed to identify unusual or suspicious activity, to monitor and
                evaluate unusual or suspicious activity, and to maintain accurate
                information needed to produce and file Suspicious Activity Reports
                (“SARs”);

            

    

     

    
      	(ii)  	
              be
                able to identify related accounts, countries of origin, location
                of the
                customer’s businesses and residences to evaluate patterns of activity;
                

            

    

     

    
      	(iii)  	
              cover
                a broad range of timeframes, including individual days, a number
                of days,
                and a number of months, as appropriate, and should segregate transactions
                that pose a greater than normal risk for non-compliance with
                BSA;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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      	(iv)  	
              establish
                risk based monitoring of high-risk customers enabling the Insured
                Institution to identify transactions for further monitoring, analysis
                and
                possible reporting; 

            

    

     

    
      	(v)  	
              establish
                periodic
                testing and appropriate adjustment and updating on an ongoing basis
                to the
                policies, procedures and processes utilized to monitor high risk
                customers;

            

    

     

    
      	(vi)  	
              ensure
                adequate referral of information about potentially suspicious activity
                through appropriate levels of management, including a policy for
                determining action to be taken in the event of multiple filings of
                SARs on
                the same customer, or in the event a correspondent or other customer
                fails
                to provide due diligence information. Such procedures shall describe
                the
                circumstances under which an account should be closed and the processes
                and procedures to be followed in doing
                so;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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      	(vii)  	
              require
                the documentation of management’s decisions to file or not to file a SAR;
                ensure the timely, accurate and complete filing of required SARs
                and any
                other similar or related reports required by law or regulation;
                and

            

    

     

    
      	(viii)  	
              ensure
                the confidentiality of any SARs
                filed.

            

    

     

    (g)  Wire
      Transfer Transactions:
      The
      Insured Institution shall develop, adopt and implement policies,
      procedures and processes with respect to wire transfer monitoring and
      recordkeeping, including requirements for complete information on beneficiaries
      and originators, as required by 31 C.F.R. 103.33;

     

    (h)  Customer
      Identification Program:
      The
      Insured Institution shall develop, adopt and implement written policies,
      procedures and processes enhancing its customer identification program (“CIP”)
      required by section 326.8(b) of the FDIC’s Rules and Regulations, 12 C.F.R. §
326.8(b), to ensure that the Insured Institution’s CIP contains at a minimum:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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      	(i)  	
              account
                opening procedures specifying the identifying information required
                for
                each customer type;

            

    

     

    
      	(ii)  	
              risk-based
                procedures for verifying the identity of new customers within a reasonable
                time after the account is opened;

            

    

     

    
      	(iii)  	
              procedures
                for circumstances in which the Insured Institution is unable to form
                a
                reasonable belief that it knows the true identity of a
                customer;

            

    

     

    
      	(iv)  	
              risk
                based procedures for reviewing existing customers to determine whether
                sufficient information has been obtained to establish the customer
                profiles and risk ratings required by subparagraph (b) above; and
                procedures for obtaining any information necessary for such profiles
                and
                risk ratings;

            

    

     

    
      	(v)  	
              procedures
                for recordkeeping and retention;

            

    

     

    
      	(vi)  	
              procedures
                to determine whether a customer appears on any federal government
                list of
                known or suspected terrorists or terrorist organizations when such
                list is
                generated;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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      	(vii)  	
              procedures
                to provide adequate notice to customers that the Insured Institution
                will
                be requesting information to verify their
                identities;

            

    

     

    
      	(viii)  	
              procedures
                to ensure that the CIP is updated on an ongoing basis as necessary
                to
                incorporate amendments to the BSA and the rules and regulations
                thereunder;

            

    

     

    
      	(ix)  	
              if
                applicable, procedures for reliance upon another financial institution
                to
                perform one or more elements of its CIP. Such procedures shall require
                at
                a minimum, confirmation that the relied-upon financial institution
                is
                subject to a rule implementing the program requirements of 31 U.S.C.
§
                5318(h) and is regulated by federal functionally regulator, confirmation
                that the customer at issue has an account or is opening an account
                at the
                relied-upon financial institution, a determination that the Insured
                Institution’s reliance upon the financial institution is justified under
                the circumstances and confirmation that the relied-upon financial
                institution has entered into a contract with the Insured Institution
                requiring it to certify annually to the Insured Institution that
                it has
                implemented its BSA/AML Compliance Program and will perform the specified
                requirements of the Insured Institution’s CIP;
                and

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    (i)  BSA/AML
      Staffing and Resources:
      The
      Insured Institution shall review BSA/AML compliance staffing and resources
      taking into consideration its size and risk profile (based upon the Risk
      Assessment) and make such modifications as are appropriate. The
      Insured Institution shall establish written policies, procedures and processes
      requiring the periodic review of and appropriate adjustment to its BSA/AML
      staffing and resources.

     

    SYSTEM
      OF OFAC INTERNAL CONTROLS

    3. Within
      30
      days of the effective date of this ORDER, the Insured Institution shall develop,
      adopt, and implement a system of internal controls designed to ensure full
      compliance with the OFAC Provisions (“OFAC Internal Controls”) taking into
      consideration its customers, their geographic locations, the types of accounts,
      products and services it offers these customers and the geographic areas in
      which these accounts, products and services are offered. At a minimum, such
      system of OFAC Internal Controls shall include:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    (a) written
      policies, procedures and processes for conducting OFAC searches of each
      department or business line of the Insured Institution;

     

    (b) written
      policies, procedures, and processes for conducting OFAC searches of customers
      and account parties, including, but not limited to, beneficiaries, guarantors,
      principals, beneficial owners, nominee shareholders, directors, signatories
      and
      powers of attorney; 

     

    (c) written
      policies, procedures and processes for obtaining and updating OFAC lists or
      filtering criteria;

     

    (d) written
      policies, procedures and processes for identifying and investigating potential
      OFAC matches;

     

    (e) written
      policies, procedures and processes for blocking and rejecting
      transactions;

     

    (f) written
      policies, procedures and processes to inform OFAC and the Insured Institution’s
      Board or its designee of blocked or rejected transactions;

     

    (g) written
      policies, procedures and procedures to manage blocked accounts; and

     

    (h) written
      policies, procedures and processes to retain OFAC records in accordance with
      the
      OFAC Provisions.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    INDEPENDENT
      TESTING

     

    4. Within
      180 days from the effective date of this ORDER, the
      Insured Institution shall establish independent testing programs for compliance
      with the BSA and OFAC Provisions, to be performed on no less than an annual
      basis. The scope of the testing procedures to be performed, and testing results,
      shall be documented in writing and approved by the Insured Institution’s Board
      or its designee.
      The
      testing procedures, at a minimum, should include the following:

     

    (a) compliance
      testing for all appropriate business lines conducted by qualified staff who
      are
      independent of the Insured Institution’s compliance, BSA/AML and OFAC
      functions;

     

    (b) formal,
      documented testing programs, including adequately detailed reports and
      workpapers;

     

    (c) testing
      of the adequacy of the Insured Institution’s Risk Assessment;

     

    (d) testing
      of the adequacy of the BSA and OFAC Internal Controls designed to ensure
      compliance with both the BSA and OFAC Provisions;

     

    (e) testing
      of the adequacy of the Insured Institution’s Training Program, as that term is
      defined in paragraph 5;

     

    (f) a
      risk-based approach that includes transactional testing and verification of
      data
      for higher risk accounts;

     

    (g) review
      of
      independent testing results by senior management;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    (h) procedures
      to ensure that senior management institutes appropriate actions in response
      to
      independent testing results; and 

     

    (i) direct
      lines of reporting between the independent testing function and the Board or
      its
      designee. 

    TRAINING

    5. Beginning
      on the effective date of the ORDER, the Insured Institution shall take all
      steps
      necessary, consistent
      with sound banking practices, to ensure that all appropriate personnel are
      aware
      of, and can comply with, the requirements of the BSA and OFAC Provisions
      applicable to the individual’s specific responsibilities to assure the Insured
      Institution’s compliance with the BSA and OFAC Provisions.

     

    6.  Within
      60
      days from the effective date of this ORDER, the
      Insured Institution shall develop, adopt and implement effective training
      programs designed for the Board, management and staff and their specific
      compliance responsibilities on all relevant aspects of laws, regulations, and
      Insured Institution policies, procedures and processes relating to the BSA
      and
      the OFAC Provisions (“Training Program”). The
      Training Program shall ensure that all appropriate personnel are aware of,
      and
      can comply with, the requirements of both the BSA and OFAC Provisions on an
      ongoing basis. The
      Training Program shall include:

     

    (a)  an
      overview of BSA and OFAC Provisions for new staff along with specific risk-based
      training designed for their specific duties and responsibilities upon
      hiring;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    (b)  training
      on the Insured Institution’s BSA/AML policies, procedures and processes along
      with new rules and requirements as they arise for appropriate personnel designed
      to address their specific duties and responsibilities; 

     

    (c)  training
      on the Insured Institution’s OFAC policies, procedures and processes along with
      new rules and requirements as they arise for appropriate personnel designed
      to
      address their specific duties and responsibilities;

     

    (d)  a
      requirement that the Board fully document the training of each employee with
      respect to both the BSA/AML and OFAC policies, procedures and processes,
      including the designated BSA and OFAC Compliance Officer(s); and

     

    (e)  a
      requirement that training in these areas be conducted no less frequently than
      annually.

     

    INTERNAL
      AUDIT FUNCTION

     

    7.   
       (a)
      Within 180 days from the effective date of this ORDER, the Insured Institution
      shall amend its policies, procedures, and processes with regard to its internal
      audit function (“Audit Function”) so that the Insured Institution reviews, at
      least on annual basis, compliance with both the BSA and OFAC Provisions as
      part
      of its routine internal audit function.

     

    (b)  The
      amended and enhanced Audit Function shall establish an internal audit plan
      to
      include a review of the Insured Institution’s branch operations.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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    (c)  The
      Insured Institution shall ensure that its Audit Function is managed by a
      qualified officer who is supported by adequate staffing levels and
      resources.

     

    (d)  The
      Insured Institution's internal Audit Function shall provide for written reports
      which document the testing results and recommendations for improvement and
      provides for monitoring and follow-up of audit exceptions. Such reports shall
      be
      provided directly to the Audit Committee of the Insured Institution’s Board on a
      timely basis.

     

    8.  Beginning
      on the effective date of this ORDER, the Insured Institution shall provide
      periodic reports to the Audit Committee of the Insured Institution’s Board
      setting forth any law enforcement inquiry that relates in any way to the BSA
      or
      OFAC Provisions, any criminal subpoena received by the Insured Institution
      and
      any action taken or response provided with respect to such inquiry or
      subpoena.

     

    THIRD
      PARTY LOOK BACK REVIEW

     

    9.  (a)Within
      20
      days from the effective date of this ORDER, the Insured Institution shall engage
      a qualified independent consultant("Consultant") acceptable to the Regional
      Director of the FDIC’s New York Regional Office (“Regional Director”) to conduct
      a review of account and transaction activity for the time period beginning
      September 1, 2006 through the effective date of this ORDER to determine whether
      suspicious activity involving any accounts or transactions at, by, or through
      the Insured Institution was properly identified and reported in accordance
      with
      the applicable suspicious activity reporting requirements (“SAR Review"). Within
      10 days of the engagement of the Consultant, but prior to the commencement
      of
      the SAR Review, the Insured Institution shall submit to the Regional Director
      for approval or non-objection an engagement letter that sets forth:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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      	(i)  	
              the
                scope of the SAR Review, including the types of accounts and transactions
                to be reviewed, which shall, at a minimum, include cash intensive
                business
                accounts, customers with high, frequent or international wire transactions
                and customers with financial transactions in locations linked to
                terrorist, drug trafficking or money laundering, including, but not
                limited to, the transactions or accounts identified in the ROE as
                requiring additional investigation by the Insured
                Institution;

               

            

    

    
      	(ii)  	
              the
                methodology for conducting the SAR Review, including any sampling
                procedures to be followed; and

               

            

    

    
      	(iii)  	
              the
                expertise and resources to be dedicated to the SAR
                Review.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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      20
      -

     

    (b) Within
      120 days from the effective date of this ORDER, the SAR Review shall be
      completed and the Consultant shall be required to provide a copy of its report
      detailing its findings to the Regional Director at the same time the report
      is
      provided to the Insured Institution.

     

    (c)  Within
      30
      days of its receipt of the SAR Review, the Insured Institution shall ensure
      that
      all matters or transactions required to be reported, that have not previously
      been reported, are reported in accordance with applicable laws and regulations
      and submit copies of any additional SARs filed to the Regional
      Director.

     

    (d)  The
      Regional Director may, in her sole discretion, require the Insured Institution
      to expand the time period of the SAR Review conducted pursuant to this Paragraph
      9 to include the period January 1, 2006 through August 31, 2006. Such additional
      SAR Review shall be commenced by the Consultant within 20 days of the Insured
      Institution’s receipt of written notice from the Regional Director and shall be
      completed within 120 days of such written notice. A copy of this expanded SAR
      Review shall be provided to the Regional Director at the same time the expanded
      SAR Review is provided to the Insured Institution and any additional matters
      or
      transactions required to be reported shall be reported in accordance with
      applicable laws and regulations. Copies of any additional SARs filed shall
      be
      submitted to the Regional Director. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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      21
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    SHAREHOLDERS

     

    10.  Following
      the effective date of this ORDER, the Insured Institution shall send to its
      parent holding company the ORDER or otherwise furnish a description of this
      ORDER in conjunction with the Insured Institution's next communication with
      such
      parent holding company. The description shall fully describe the ORDER in all
      material respects. 

     

    COMPLIANCE
      COMMITTEE

     

    11.  (a)
      Within 30 days from the effective date of this ORDER, the Insured Institution’s
      Board shall appoint a committee ("Compliance Committee") composed of at least
      three directors who are not now, and have never been, involved in the daily
      operations of the Insured Institution, and whose composition is acceptable
      to
      the Regional Director, to monitor the Insured Institution's compliance with
      this
      ORDER. 

     

    (b)
      Within 30 days of the acceptance or non-objection to the composition of the
      Compliance Committee by the Regional Director, and at monthly intervals
      thereafter, such Compliance Committee shall prepare and present to the Insured
      Institution's Board a written report of its findings, detailing the form,
      content, and manner of any action taken to ensure compliance with this ORDER
      and
      the results thereof, and any recommendations with respect to such compliance.
      Such progress reports shall be included in the minutes of the Insured
      Institution's Board meetings. Nothing contained herein shall diminish the
      responsibility of the entire Board to ensure compliance with the provisions
      of
      this ORDER.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    -
      22
      -

     

    PROGRESS
      REPORTS

     

    12.  By
      the
      30th
      day
      after the end of the calendar quarter following the effective date of this
      ORDER, and by the 15th
      day
      after the end of every calendar quarter thereafter while this ORDER is in
      effect, the Insured Institution shall furnish written progress reports to the
      Regional Director detailing the form, content, and manner of any actions taken
      to secure compliance with this ORDER, and the results thereof. The Insured
      Institution shall continue to submit the quarterly progress reports until
      written notice from the Regional Director.

     

    OTHER
      ACTIONS

     

    13.  It
      is
      expressly and clearly understood that if, at any time, the Regional Director
      shall deem it appropriate in fulfilling the responsibilities placed upon him
      or
      her under applicable law to undertake any further action affecting the Insured
      Institution, nothing in this ORDER shall in any way inhibit, estop, bar or
      otherwise prevent him or her from doing so, including, but not limited to,
      the
      imposition of civil money penalties.

     

    14.  It
      is
      expressly and clearly understood that nothing herein shall preclude any
      proceedings brought by the Regional Director to enforce the terms of this ORDER,
      and that nothing herein constitutes, nor shall the Insured Institution contend
      that it constitutes, a waiver of any right, power, or authority of any other
      representatives of the United States or agencies thereof, Department of Justice
      or any other representatives of the Commonwealth of Puerto Rico or any other
      agencies thereof, including any prosecutorial agency, to bring other actions
      deemed appropriate.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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      23
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    ORDER
      EFFECTIVE 

     

    15.  The
      effective date of this ORDER shall be immediately upon the date of
      issuance.

     

    16.  The
      provisions of this ORDER shall be binding upon the Insured Institution, its
      directors, officers, employees, agents, successors, assigns, and other
      institution-affiliated parties of the Insured Institution. 

     

    17.  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, terminated, suspended, or set aside in writing by the
      FDIC.

     

    Pursuant
      to delegated authority.

    

    Dated:
      March 15, 2007

    

    
      	 	 	 
	 	 
	 
 	 
 	 
 
	 	 	/s/ Doreen
              R.
              Eberley
	 	
              
Doreen
              R. Eberley
	 	
              Regional
                Director

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