First Bank of Delaware was stripped of its state charter to operate and the bank was penalized $15 million by federal regulators for failing to implement an effective anti-money laundering compliance program.
The bank, based in Wilmington, settled with the Federal Deposit Insurance Corp. and the Treasury Department’s Financial Crime Enforcement Network, or Fincen, which together found that First Bank failed to implement an effective compliance program with internal controls designed to report evidence of money laundering or other suspicious activity.
First Bank also settled charges with the Justice Department related to the same misconduct. The Justice Department alleged that the bank, from 2009 to 2011, violated the Financial Institutions Reform, Recovery and Enforcement Act by originating withdrawals on behalf of fraudulent merchants, causing money to be taken from the bank accounts of consumers.
The bank established direct relationships with several fraudulent merchants and third-party payments processors working with additional fraudulent merchants, the Justice Department alleged.
It originated hundreds of thousands of debit transactions against consumers’ bank accounts, using “remotely-created checks,” a type of transaction the Justice Department said is widely known in the banking industry, consumer protection groups and by law enforcement as used by fraudulent companies.