OCIF suspends First Finance’s operations, seeks $1M+ in fines, payments
The Office of the Commissioner of Financial Institutions (OCIF, in Spanish) issued a omplaint and cease and desist order, as well as a temporary order designating a trustee effective immediately, against First Finance International Bank Inc. an International Financial Entity (IFE) organized and doing business under the Puerto Rico International Financial Center Regulatory Act.
The order mandates the suspension of the entity’s operations “due to its gross non-compliance with the minimum capital requirements set for in both the Act and the Consent Order issued by OCIF on June 10, 2019, its non-compliance with the requirements established in the license renewal process, and its hiding of relevant information about its audited financial statements,” OCIF Commissioner Natalia Zequeira-Díaz said.
The Order also imposes on First Finance administrative fines totaling $775,000 for several violations to the laws and regulations administered by OCIF, demands payment of $300,000 corresponding to a certificate of deposit previously pledged to OCIF, and orders it to submit to a dissolution and liquidation process that safeguards its customers’ deposits.
The order states that since the beginning of First Finance’s banking operation in Puerto Rico, OCIF has guaranteed it the due process of law during all administrative procedures before the regulatory entity.
However, “despite multiple opportunities to demonstrate its faithful compliance with the Law, First Finance incurred in a systemic pattern of non-compliance with the legal requirements regarding the minimum capital necessary to operate an IFE in a viable fashion. The documentation and/or information, including business records and audited financial statements, contained in First Finance’s administrative file before OCIF, establish beyond any doubt that the financial entity faces an insolvency scenario, as defined in the law,” according to the order.
The order further notes that “at present, there exists an imminent danger: (i) to the security and operational soundness of First Finance including, but not limited to, the deposits in its possession; and (ii) to the public interest that OCIF must protect by ensuring that EFIs comply with the parameters and/or applicable legal requirements for a sound, responsible and viable operation.”
“The foregoing extraordinary circumstances, individually and/or taken as a whole, justify the issuance by OCIF of the foregoing order, effective immediately, such that what is set forth herein shall enter into effect immediately, as provided by Law,” the order mandates.
The OCIF designated attorney and CPA Wigberto Lugo Mender, a professional with vast experience in these processes, to serve as First Finance’s trustee, effective immediately.
The Trustee will take immediate possession of First Finance’s assets and liabilities, books, registries, documents, and files and will undertake and exercise the duties that the international finance entity’s Board of Directors exercised at present.
Further, it will be the trustee’s primary objective to organize the entity’s affairs such that its dissolution and liquidation may be completed without delay, the agency noted.
First Finance has been summoned to a hearing at OCIF within 10 days to (i) determine whether the temporary order is to be made permanent or lifted and (ii) give First Finance an opportunity to be heard regarding the order and confirm, modify, or void the same.
If the entity does not appear at the hearing, the OCIF will continue the processes to confirm, modify or void both orders.
“With the actions we have taken today in the First Finance matter we comply fully with our duty as regulator, pursuant to OCIF’s laws and regulations, to protect against irreparable harm not only the interests of the entity and/or the persons or entities that own funds or assets in the institution but, ultimately, the soundness and reputation of Puerto Rico’s financial system,’ Zequeira said.
“Although OCIF has guaranteed the entity’s due process under law and regulation, including giving it multiple opportunities to undertake corrective actions, First Finance, unfortunately, has a long history of gross non-compliance with the Law and regulations that govern the Puerto Rico International Financial Center,” she said.