Former Credit Union BSA Compliance Officer Pleads Guilty to AML Charge

On Wednesday morning, Gyanendra Asre, 56, of Greenwich, Conn., pleaded guilty in a federal courtroom to running a failed anti-money laundering program at a New York credit union.

By Wednesday afternoon, the Financial Crimes Enforcement Network (FinCEN) slapped a $100,000 civil money penalty against Asre, saying his willful violations of the Bank Secrecy Act (BSA) led to the collapse of the $1.8 million New York State Employees Federal Credit Union (NYSEFCU) that served 1,183 members for more than eight decades. But in just two years, Asre transformed “NYSEFCU from a one branch, not-for-profit credit union with a single common bond field of membership serving New York State employees to a conduit for repatriating bulk cash and checks from Mexico, through MSBs that Asre controlled, without any requisite AML oversight of the underlying transactions,” according to FinCEN’s 26-page consent order.

The total unreported suspicious transactions volume associated with Asre’s scheme that should have been reported in suspicious activity reports was more than $940 million, FinCEN said. What’s more, because Asre was a former NYSEFCU member of its supervisory committee and became the credit union’s BSA compliance officer, FinCEN’s consent order said it is fair to say that at least some management of the credit union and a check-clearing company under Asre’s control were complicit in a cash and check financial repatriation scheme using Mexican banks.

FinCEN’s consent order also banned the former credit union member from participating in the affairs of any federally insured financial institution subject to the BSA for five years.

Asre had decades of experience at complex financial institutions and was a manager of an armored car company, IBI. He approached NYSEFCU in early 2014 and made a pitch to the board of directors to join the credit union’s supervisory committee because he possessed extensive hands-on expertise in know-your-client due diligence, documentation, transaction monitoring and AML risk management, including proficiency in AML and the BSA.

Asre worked in management positions at several companies that handled the international purchase, sale and shipment of bulk cash or checks.

According to FinCEN, he offered his experience and expertise to NYSEFCU in exchange for expanding the credit union’s field of membership to provide banking services for the 150 employees of IBI, and to open a master account at the Federal Reserve Bank of New York (FRBNY) that could be used to move IBI’s funds internationally. He proposed to use NYSEFCU to expand IBI’s business by facilitating the international transfer of U.S. currency and promised the credit union would increase its revenue from expanding these international currency transaction services.

By late November 2014, Asre was placed on the supervisory committee and was later appointed BSA compliance officer, a volunteer position he held from March 2015 until April 2016. Although he was not paid, his financial gain for his misconduct included the profits he received from money services businesses (MSB) he owned, controlled or was affiliated with. Through his credit union position, he was able to use NYSEFCU’s access to the American financial system to provide the infrastructure necessary for his MSBs to perform their cash and check financial repatriation services.

The consent order, however, did not say how much money Asre made from his scheme.

In March 2015 when he became BSA compliance officer, the credit union sought and received approval from the NCUA to convert its charter to a multiple common bond charter. NYSEFCU sought this change to include “the employees of IBI” in its field of membership. In the same month, Asre received the credit union’s approval to open a master account with FRBNY.

“Asre (then) established the NYSEFCU-CUSO and arranged for it to accept bulk cash deposits from Mexican Bank A. At Asre’s direction, IBI accepted bulk cash from Mexican Bank A in Mexico and then deposited this cash by armored car shipment to IBI’s account at NYSEFCU,” according to the consent order. “After receiving the funds in IBI’s account, NYSEFCU internally transferred those funds to the NYSEFCU-CUSO account at NYSEFCU. Finally, NYSEFCU transferred these funds by an international wire transfer, through the NYSEFCU’s master account with FRBNY, back to Mexican Bank A. This process functioned as a way for Mexican Bank A to convert bulk cash to electronic deposits. Thereafter, over a period of more than a year, the credit union accepted IBI’s bulk cash deposits, processing a total of over $150 million in this manner.”

What’s more, in early 2015, Asre convinced NYSEFCU’s board of directors to allow DDH to provide “check clearing” services by and through the credit union. DDH, which was controlled by Asre, was used by the credit union to clear checks for a second Mexican bank, the FinCEN consent order said. The credit union deposited customers’ checks from this Mexican bank into DDH’s credit union account and then wired these funds back to the bank in Mexico through its master account in an arrangement like the purchase of bulk cash through the NYSEFCU-CUSO. Over the course of nine months, NYSEFCU processed a total of over $110 million.

Because of Asre’s scheme, NYSEFCU’s business model changed drastically to incorporate bulk currency transactions from Mexico, which ultimately became 99% of the credit union’s revenue before the currency repatriation services were ceased.

In early 2016, the NCUA identified significant deficiencies in NYSEFCU’s compliance with the BSA and its implementing regulations, particularly regarding the entities that Asre brought in as customers.

The NCUA demanded that the credit union cease providing services to those entities by June 17, 2016, and required the credit union to hire an independent qualified auditor to determine the adequacy of its AML program.

“The auditor found systemic inadequacies in the credit union’s compliance programs. As a result, in October 2017, the NCUA liquidated NYSEFCU,” the consent order said. “Asre’s actions and the resulting BSA violations were a major contributing factor to the dissolution of NYSEFCU.”

Asre was indicted by a grand jury from the Eastern District of New York in Brooklyn in March 2021 and originally faced eight felony counts of failing to maintain an AML program at the credit union, failing to maintain an effective AML program at the credit union’s CUSO, failing to file suspicious activity reports and operating an unlicensed money transmitting business.

After Asre pleaded guilty to one felony count of failing to maintain an AML program at the credit union, his sentencing hearing was scheduled for May 3 in U.S. District Court in Brooklyn.

Another man involved in Asre’s scheme, Hanan Ofer, was sentenced to two years of probation last September after he pleaded guilty to one felony count of failing to maintain an effective anti-money laundering program. Federal prosecutors recommended a probation sentence because Ofer was a minor participant.

READ MORE: FinCEN’s Consent Order.