For which of the following is a bank most likely to be in danger of receiving a cease and desist order?
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A. B. C. D.D
A Cease and Desist Order (C&D) is a formal enforcement action issued by a regulatory agency, such as the Federal Reserve, FDIC, or OCC, against a bank or other financial institution. The order requires the institution to stop certain activities or to take corrective actions to address unsafe or unsound banking practices or violations of laws and regulations.
In the case of the four options given, the bank is most likely to be in danger of receiving a cease and desist order for option D - Failure to file suspicious activity reports (SARs). This is because SARs are an essential part of a bank's anti-money laundering (AML) program, which is designed to detect and prevent money laundering and terrorist financing activities.
Banks are required by law to file SARs with the Financial Crimes Enforcement Network (FinCEN) whenever they detect suspicious activity that may indicate criminal or terrorist activities. SARs must be filed within a specific time frame, and failure to do so is a violation of the Bank Secrecy Act (BSA) and may result in regulatory enforcement actions.
Repetition in a BSA examination of a noncritical deficiency reported in a previous BSA examination (Option A) may not necessarily result in a cease and desist order, but it could lead to more significant regulatory scrutiny and possibly additional enforcement actions if the bank fails to address the deficiency adequately.
Failure to document AML training to part-time clerical employees (Option B) is a deficiency in the bank's AML program, but it is not considered a significant violation of BSA requirements. If the bank fails to address the deficiency and adequately train its employees, it could lead to more severe regulatory action, but it is not likely to result in a cease and desist order on its own.
A 2 percent error rate on the bank's Currency Transaction Reports (CTRs) (Option C) may indicate that the bank's systems or processes are not functioning correctly, but it is not a significant violation of BSA requirements, and it is unlikely to result in a cease and desist order unless the errors are severe and persistent.
In summary, while all four options represent deficiencies or violations of BSA requirements, failure to file suspicious activity reports (SARs) is the most critical and is most likely to result in a cease and desist order if the bank fails to address the deficiency.