FDIC Issues Consent Order for Oklahoma’s Bank of Vici, Emphasizing AML and Succession Planning

The Federal Deposit Insurance Corporation (FDIC) has published a consent order against Bank of Vici, a small community bank in Oklahoma with $33 million in assets. This marks the smallest bank by asset size to receive such an order since late 2023, when a $26 million asset bank faced similar scrutiny. The order addresses a wide range of issues, including IT concerns, credit losses, and anti-money laundering (AML) compliance. While the AML section is brief, it delivers critical directives that apply to financial institutions of all sizes.

One of the most significant AML directives in the order is straightforward: “This [AML] Officer shall… Report directly to the Board.” This requirement reinforces what many industry professionals have long advocated—AML Officers should not be buried under multiple layers of management. They must not report to a Chief Compliance Officer (CCO), who then reports to the Chief Risk Officer (CRO), who finally reports to the Board. Instead, the AML Officer should have direct access to the Board, ensuring proper oversight and priority. As industry expert Dave Mayo would say—it’s now official!

Another key point in the order states: “This [AML] Officer shall… have sufficient executive authority.” While regulatory agencies have frequently emphasized this requirement, it holds particular significance for banks with assets between $1 billion and $5 billion, where AML Officers are often relegated to lower tiers of management. The fact that a $33 million asset bank is being held to this standard should serve as a wake-up call for larger institutions. This is an opportunity for banks to reassess their internal structures and ensure that their AML Officers have the authority and visibility necessary to meet compliance expectations.

Additionally, the order explicitly calls out deficiencies in succession planning. It mandates that, at a minimum, the plan must identify key executive positions, including the President, AML Officer, and IT Manager. Historically, AML Officers have often been excluded from succession planning, as they are not always recognized as key executives. While similar regulatory expectations have been noted throughout 2024, this order presents a clear and direct statement—community banks must have a solid succession plan that encompasses all executive roles. And as noted earlier, those executives should include the AML Officer, with direct reporting to the Board and sufficient authority (see points 1 and 2 above).

The FDIC’s consent order also points out that Bank of Vici was required to remediate issues outlined in their April 2024 Report of Examination (ROE). However, the bank appears to have fallen short in addressing those concerns within the given six-month timeline. The order suggests that a failure to properly interpret and act on the regulatory findings led to continued deficiencies.

The survival of small community banks is crucial, and institutions must take proactive steps to avoid facing costly remediation efforts that could make them targets for acquisition. For any small bank looking to steer clear of such expenses, the solution is clear: Implement a strong AML framework with direct Board reporting and ensure proper executive succession planning. As this case demonstrates, it is far more cost-effective to invest in compliance now rather than deal with the financial burden of remediation later.

By fLEXI tEAM