US charges Miami-area bank Gibraltar Private Bank and Trust Company over lapses linked to Ponzi lawyer

U.S. regulators fined the Miami-based Gibraltar Private Bank and Trust Company $4 million for lapses. The bank allegedly failed to report suspicious transactions linked to convicted former lawyer Scott Rothstein, who ran a Ponzi scheme that cost investors more than $1 billion.

According to Sun Sentinel, the fine for $4 million was forced by the U.S. Treasury Department's Financial Crimes Enforcement Network. It alleged the Miami-based bank of failing to timely file 120 suspicious activity reports, or SARS. This corresponded to nearly $558 million in financial transactions during the years 2009 to 2013.

The government stated that Gibraltar Private Bank and Trust Company's failure to file the reports. The move may have helped former Fort Lauderdale attorney Scott Rothstein, garner $1.2 billion in a Ponzi scheme that resulted in his 50 years federal prison sentence.

"We may never know how that scheme might have been disrupted had Gibraltar more rigorously complied with its obligations under the law," Jennifer Shasky Calvery, director of the financial crimes enforcement network, stated in a written statement. She added, "This bank's failure to implement and maintain an effective program exposed its customers, its banking peers, and our financial system to significant abuse."

Reuters reported that Gibraltar errantly violated the Bank Secrecy Act, which is the primary U.S. anti-money laundering law, FinCEN noted in a statement. While FinCEN had warned the bank in 2010 of its deficiencies, Gibraltar did not admit its non-cooperation until the Office of the Comptroller of the Currency took enforcement action in 2014.

The compliance lapses at the bank led to the failure of the move to report the suspicious activity on at least 120 occasions between the year 2009 and 2013. FinCEN even added that the transactions totalled to nearly $558 million, as reported by CNBC.

Meanwhile, Gibraltar agreed to settle on the fine of $2.5 million to the OCC and a $1.5 million penalty to FinCEN. Moreover, FinCEN continues to probe other banks on their non-compliance linked to Rothstein.

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