Indicment Alleges Violations of Bank Secrecy Act at Plains Bank
KSCB News - June 15, 2015 1:07 pm
Among charges connected to a Meade couple indicted in April for allegedly laundering millions of dollars in drug money through an account at Plains State Bank were counts against bank employees for violations of the federal Bank Secrecy Act.
According to that law, a transaction requires reporting to federal officials if it involves $10,000 in funds – or multiple deposits of $3,000 or more in a day – or just $5,000 if the bank knows, suspects, or has reason to suspect the transaction involves funds derived from illegal activities.
The couple, George Enns, 69, and his wife, Agatha, 67, were indicted on 33 counts of money laundering and single counts of attempted money laundering and conspiracy. The indictment states that from 2011 to August 2014, deposits to the Enns’ account exceeded $6.8 million, including more than $1.6 million in cash.
That included at least 30 deposits allegedly made by George Enns between March 2011 and February 2014 that ranged from $10,000 to $305,000, including four deposits of at least $100,000.
Kris Doswell, senior vice president of marketing and training at First National Bank in Hutchinson, said the Bank Secrecy Act is one of many federal regulations that the bank takes very serious and abide by.
“There is no secret in the bank secrecy act,” Doswell said. “Our hope is that all banks abide by the act. We have employees trained to follow procedures and regulations in every federal regulations. We take them all very serious.”
Doswell said she has read stories on the indictment at the Plains State Bank and the indictment spells out what was done wrong.
“I think the indictment on that is clear on what they did not follow,” Doswell said.
First adopted in 1970 – and last amended as part of the U.S. Patriots Act in 2001 – the Bank Secrecy Act requires banks and credit unions to develop, implement and maintain effective anti-money laundering programs to prevent financial institutions from being used to facilitate money laundering.
The program requires, at a minimum, the development of internal policies, procedures and controls; the designation of a compliance officer; an ongoing employee training program, and an independent audit function to test programs.
The act imposes a legal obligation on banks to know their customers’ business, the source of their customers’ money and the type of transactions that are typical for their customers. Banks have a legal obligation to report or, in some cases, refuse to conduct transactions the bank finds suspicious, the indictment states.
Plains State Bank employees indicted in the case included James Kirk Friend, 52, Kathy F. Shellman, 57, and Matthew Thomas, 37, all of Plains.
Friend – charged with conspiracy, 29 counts of aiding and abetting money laundering and one count of failing to file a SARS report – joined the bank in 1990 as a loan officer. He was appointed bank president in 2005 and named senior vice president in 2013.
Shellman and Thomas are each indicted on single counts of failure to file a Suspicious Activity Report. Shellman, who joined the bank in 1980, was a cashier and IT officer whose responsibilities included internal audit functions when she left in 2014. Thomas, who joined the bank in 2008, was the Bank Secrecy Act officer and a loan officer when he left in 2014.
Beginning as early as July of 2010, the bank’s Board of Directors designated Thomas as the BSA officer and he was responsible for the overall administration of the act’s compliance program and employee training, an affidavit in the case states.
Friend and Thomas were interviewed by law enforcement officers about the Ennses’ account activity on Aug. 19, 2014. According to the indictment, Thomas told officers that Ennses reported receiving money from selling corn seed in Mexico. Thomas told officers he understood that the proceeds from the sales were brought in to the bank for deposit.
Thomas did not know the location of the business in Mexico, nor could he explain why money from the sales could not be wired from a Mexican bank to Plains State Bank. Thomas also could not explain why the Ennses would conduct business in a foreign country where the Ennses were paid with United States currency.
The indictment states Friend admitted he knew the Ennses reported bringing the bulk of U.S. currency from Mexico. When Friend was questioned by officers about filling out a Suspicious Activity Report on transactions involving bulk currency, Friend told them that it was bank policy to file a SAR on transactions in excess of $100,000.
Friend and Thomas admitted to officers that they did not require the Ennses to provide proof that any of the currency transported from the U.S. was declared at the United States-Mexico border. They also did not obtain any information and documentation from the Ennses that supported their statements about the source of the money or if it involved the Ennses’ business.
The investigation into the Ennses was prompted after they were stopped several times coming into the U.S. from Mexico with large sums of cash in plastic trash bags. The couple claimed it was a seed business they operated in Mexico.