Order of Assessment of Civil Money Penalty Issued Upon Consent Pursuant to the Federal Deposit Insurance Act, as Amended
Summary
An Order of Assessment of Civil Money Penalty Issued Upon Consent by the Board of Governors of the Federal Reserve System against Popular Bank, New York, New York, Docket No. 22-034-CMP-SM. The order recites that the bank, an SBA-approved PPP lender from April 2020 to May 2021, in August 2020 processed and funded six PPP loans totaling approximately $1.1 million despite having detected significant indicia of potential fraud, and did not timely report it. It states that this conduct reflected ineffective controls, violated the bank's internal BSA protocols and constituted unsafe or unsound practices, and that the bank self-reported the matter. The bank consents to a civil money penalty of $2,257,132. The order is effective January 20, 2023 and signed by José R. Coleman Tió for the bank and Ann E. Misback, Secretary of the Board.
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UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
Docket No. 22-034-CMP-SM
In the Matter of
Order of Assessment of Civil Money
POPULAR BANK Penalty Issued Upon Consent
Pursuant to the Federal Deposit
New York, New York Insurance Act, as Amended
WHEREAS, Popular Bank, New York, New York (the “Bank”), is a New York state-
chartered bank that is a member of the Federal Reserve System;
WHEREAS, the Board of Governors of the Federal Reserve System (the “Board of
Governors”) is the appropriate federal supervisor of the Bank;
WHEREAS, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security
Act (P.L. 116-136, the “CARES Act”) was signed into law, providing emergency financial
assistance to individuals, families, and businesses negatively impacted by the COVID-19
pandemic;
WHEREAS, the Paycheck Protection Program (“PPP”), established by the U.S. Small
Business Administration (the “SBA”) pursuant to the CARES Act, provided for SBA-
guaranteed, low-interest loans to small businesses and other eligible entities that under certain
circumstances could be fully or partially forgiven;
WHEREAS, from April 2020 to May 2021, the Bank was an SBA-approved lender to
provide PPP loans;
WHEREAS, the Bank was required to follow SBA guidance, as well as federal rules and
regulations implementing the Bank Secrecy Act (“BSA”) and the Bank’s own BSA protocols in
processing PPP loans;
WHEREAS, these requirements called for the Bank to, among other things, reasonably
verify the identity of its customers and to document, investigate, and report suspicious activities
that it detected;
WHEREAS, in August 2020, the Bank processed and funded six PPP loans, totaling
approximately $1.1 million, despite having detected that the loan applications contained
significant indicia of potential fraud;
WHEREAS, the Bank did not timely report the indicia of potential fraud to the SBA and
continued to process and fund these loans despite its awareness of indicia of potential fraud;
WHEREAS, the Bank’s processing and funding of these loans despite the indicia of
potential fraud, and failure to timely report the potential fraud, demonstrated ineffective controls
and procedures that resulted in violations of the Bank’s internal BSA protocols, and constituted
unsafe or unsound practices;
WHEREAS, the six PPP loans were fraudulent and the Bank has suffered a loss with
respect to each loan;
WHEREAS, the Bank self-reported this matter, has undertaken substantial remediation
related to its ineffective controls and procedures that resulted in the unsafe or unsound practices
described herein, and has cooperated with the Board of Governors’ investigation;
WHEREAS, the unsafe or unsound practices described above warrant the assessment of a
civil money penalty by the Board of Governors against the Bank under section 8(i)(2)(B) of the
Federal Deposit Insurance Act, as amended (12 U.S.C. § 1818(i)(2)(B)) (the “FDI Act”);
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WHEREAS, the Board of Governors is issuing this Consent Order of Assessment of a
Civil Money Penalty (the “Order”); and
WHEREAS, the board of directors of the Bank, at a duly constituted meeting, adopted a
resolution authorizing and directing the undersigned signatories for the Bank to enter into this
Order on behalf of the Bank, and consent to the Bank’s compliance with each and every
provision of this Order, and to waive any and all rights that the Bank may have with respect to
this Order pursuant to section 8 of the FDI Act, as amended (12 U.S.C. § 1818), and 12 C.F.R.
Part 263, including, but not limited to: (i) the issuance of a notice of charges on any matters set
forth in this Order; (ii) a hearing for the purpose of taking evidence on any matters set forth in
this Order; (iii) judicial review of this Order; and (iv) challenge or contest, in any manner, the
basis, issuance, validity, terms, effectiveness or enforceability of the Order or any provision
hereof.
NOW, THEREFORE, before the filing of any notices, or taking of any testimony or
adjudication of or finding on any issues of fact or law herein, and without the Bank admitting or
denying any allegation made or implied by the Board of Governors in connection herewith, and
solely for the purpose of settling this matter without a formal proceeding being filed and without
the necessity for protracted or extended hearings or testimony, it is hereby ordered, pursuant to
sections 8(b)(3) and 8(i)(2)(B) of the FDI Act (12 U.S.C. §§1818(b)(3) and 1818(i)(2)(B)) as
follows:
Assessment of Civil Money Penalty
1. The Board of Governors hereby imposes a civil money penalty on the Bank in the
amount of $2,257,132 for the unsafe or unsound practices described above. The civil money
penalty shall be remitted at the time of the execution of this Order by Fedwire transfer of
immediately available funds to the Federal Reserve Bank of Richmond, ABA No. 051000033,
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beneficiary, Board of Governors of the Federal Reserve System. The Federal Reserve Bank of
Richmond, on behalf of the Board of Governors, shall distribute this sum to the U.S. Department
of the Treasury, pursuant to section 8(i) of the FDI Act (12 U.S.C. § 1818(i)). This penalty is a
penalty paid to a government agency for a violation of law for purposes of 26 U.S.C. § 162(f)
and 26 C.F.R. § 1.162-21.
Notices
2. All communications regarding this Order shall be sent to:
(a) Richard M. Ashton, Esq.
Deputy General Counsel
David Williams, Esq.
Associate General Counsel
Board of Governors of the Federal Reserve System
20th & C Streets, N.W.
Washington, DC 20551
(b) José R. Coleman Tió
Executive Vice President, Chief Legal Officer and General Counsel
Popular Bank
85 Broad Street
New York, NY 10004
(c) Nicolas Bourtin
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004
Aisling O’Shea
Sullivan & Cromwell LLP
1700 New York Avenue, N.W.
Washington, DC 20006
Miscellaneous
3. The provisions of this Order shall be binding on the Bank and its successors and
assigns.
4. Each provision of this Order shall remain effective and enforceable until stayed,
modified, terminated, or suspended in writing by the Board of Governors.
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5. The provisions of this Order shall not bar, estop, or otherwise prevent the Board
of Governors, or any other federal or state agency, from taking any other action affecting the
Bank or any of its current or former institution-affiliated parties and their successors and assigns;
provided, however, that the Board of Governors shall not take any further enforcement action
against the Bank or any subsidiary thereof, or their successors and assigns, with respect to the
conduct described in the WHEREAS clauses of this Order, to the extent known by the Board of
Governors as of the effective date of this Order. This release and discharge shall not preclude or
affect: (i) any right of the Board of Governors to determine and ensure compliance with this
Order, (ii) any proceedings brought by the Board of Governors to enforce the terms of this Order,
or (iii) any proceedings brought by the Board of Governors against individuals who are or were
institution-affiliated parties of the Bank.
By Order of the Board of Governors of the Federal Reserve System effective this 20th
day of January, 2023.
POPULAR BANK BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM
By: /s/ José R. Coleman Tió By: /s/ Ann E. Misback
José R. Coleman Tió Ann E. Misback
Executive Vice President, Chief Legal Secretary of the Board
Officer and General Counsel
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