<p>The <strong>Financial Crimes Enforcement Network (FinCEN)</strong> has invoked its <strong>&ldquo;Gap Rule&rdquo;</strong> to impose significant <strong>anti-money laundering (AML) penalties</strong> on Bancr&eacute;dito International Bank &amp; Trust Corporation, a Puerto Rico-based financial institution. This move underscores the agency&rsquo;s expanding enforcement powers and its intent to hold International Banking Entities (IBEs) accountable under the Bank Secrecy Act (BSA) even in the absence of a federal primary regulator.</p>

<h4>Background</h4>

<p>Bancr&eacute;dito had been under investigation for failing to comply with BSA obligations, including the <strong>timely filing of Suspicious Activity Reports (SARs)</strong> and inadequate due diligence on correspondent accounts. The Gap Rule, which came into effect in 2020, mandates that IBEs without a federal functional regulator&mdash;like many Puerto Rican banks&mdash;implement and maintain a full AML compliance program.</p>

<p>FinCEN cited Bancr&eacute;dito for numerous deficiencies, noting that the bank&rsquo;s internal controls did not adequately prevent money laundering risks, particularly from transactions involving high-risk jurisdictions, such as Venezuela and Panama. The agency&rsquo;s enforcement action culminated in a <strong>$15 million civil penalty</strong>, alongside the bank surrendering its International Banking Entity license.</p>

<h4>Gap Rule Enforcement</h4>

<p>The <strong>Gap Rule</strong> represents a critical tool in FinCEN&rsquo;s regulatory arsenal. Prior to its implementation, some IBEs operated in a quasi-regulated environment, with limited oversight from federal regulators. The rule closed this loophole, giving FinCEN the authority to require strict AML programs and penalize non-compliance.</p>

<p>Bancr&eacute;dito&rsquo;s case demonstrates how the Gap Rule can be applied to enforce BSA compliance retroactively. FinCEN&rsquo;s findings highlighted not only procedural deficiencies but also the potential facilitation of illicit financial flows due to inadequate monitoring. The agency&rsquo;s action sends a clear signal to all IBEs operating in Puerto Rico and other U.S. territories that <strong>regulatory gaps no longer provide protection from enforcement actions</strong>.</p>

<h4>Legal and Industry Implications</h4>

<p>The Bancr&eacute;dito AML penalties case has far-reaching implications for both Puerto Rican banking entities and their legal advisors. It emphasizes the need for <strong>robust compliance programs, independent audits, and timely reporting</strong> to meet federal standards. Law firms advising IBEs now face heightened scrutiny regarding their counsel and recommendations, as poor advice can directly contribute to regulatory penalties.</p>

<p>Moreover, the case is a precedent-setting example of how federal authorities can apply regulatory tools, such as the Gap Rule, to hold offshore and territorial banks accountable. Observers predict that FinCEN will increasingly rely on the Gap Rule to address compliance failures in the IBE sector, particularly in high-risk financial environments where cross-border transactions are frequent.</p>

<h4>Conclusion</h4>

<p>The Bancr&eacute;dito enforcement action under the Gap Rule highlights the evolving landscape of financial regulation in U.S. territories. It underscores the importance of compliance, transparency, and due diligence for IBEs. Banks must not only maintain robust AML frameworks but also ensure that all legal and operational guidance aligns with federal regulatory expectations to avoid severe financial and reputational penalties.</p>

<p>This case serves as a cautionary tale for banks, legal advisors, and stakeholders in Puerto Rico, demonstrating that regulatory oversight is tightening and that enforcement tools like the Gap Rule are being actively applied.</p>