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: Popular Bank of New York draws fine for PPP loan administration problem

The Federal Reserve Board on Tuesday said it fined Popular Bank of New York BPOP $2.3 million for processing six potentially fraudulent Paycheck Protection Program loans. The central bank said Popular Bank failed to report potential fraud in a timely manner despite having detected that the loan applications contained “significant indications of potential fraud,” according to a statement. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Small Business Administration-approved lenders including Popular Bank were granted the ability to issue PPP loans to qualified small businesses negatively impacted by the COVID-19 pandemic, but they were required to follow 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,” the Fed said. A spokesperson from Popular Bank of New York said Popular Bank self-reported this matter, undertook “substantial remediation” and “fully cooperated” with the Fed’s investigation. “We have consented to the imposition of the order and the civil money penalty,” the statement from the bank said. “The order does not impose any other obligations on the bank.” Shares of Popular Bank are down 1.4% on Tuesday. The stock has gained 3.1% in 2023, compared to an 8.5% rise by the Nasdaq COMP.

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