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 did not reply to an email from MarketWatch. Shares of Popular Bank are down 0.9% on Tuesday. The stock has gained 3.1% in 2023, compared to an 8.5% rise by the Nasdaq COMP.
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