The Federal Reserve Board on Tuesday announced that it has fined Popular Bank, of New York, New York, $2.3 million for processing six Paycheck Protection Program (PPP) loans despite having detected that the loan applications contained significant indications of potential fraud and for failing to report the potential fraud in a timely manner. The six loans totaled approximately $1.1 million.
Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Small Business Administration-approved lenders like Popular Bank were allowed to provide PPP loans to qualified small businesses negatively impacted by the COVID-19 pandemic, but were required to follow their anti-money laundering policies. Popular Bank's processing of potentially fraudulent PPP loans and failure to report the potential fraud in a timely manner violated these policies and constituted unsafe or unsound banking practices.
