NEW YORK − Financial Services Superintendent Linda A. Lacewell today announced that the Department of Financial Services (DFS) will take enforcement action through administrative proceeding to revoke the licenses of Kayla Check Cashing Corp., South Island Check Cashing Corp., East Island Check Cashing Corp., Bay Shore Check Cashing Corp., and Brentwood Check Cashing Corp. and impose civil penalties for alleged violations of New York Banking Law and Federal laws and regulations. The entities are owned equally by President Lisa Lentini and Vice President John Drago, and managed by Mr. Drago. The administrative proceeding will begin February 24, 2020.

The charges stem from a DFS investigation and examinations of the entities, which identified serious deficiencies concerning the entities’ compliance with New York and Federal laws and regulations concerning the business of check cashing, anti-money laundering (AML) compliance, and requirements of the Bank Secrecy Act.

In its examinations of the entities, DFS found an overall lack of management oversight on both operating and compliance policies and procedures, and identified multiple concerns relating to the entities’ BSA/AML program and transaction monitoring, including, among other deficiencies; inaccurate books and records; cashing post-dated checks; insufficient BSA/AML compliance; inadequate risk-assessment procedures and customer identification and Know Your Customer programs.

In an examination of the entities, DFS found that despite the Department’s repeated criticism of the entities’ performance, management had not implemented effective controls to mitigate and manage a BSA/AML compliance program and Office of Foreign Assets Control (OFAC) risks.

A subsequent DFS investigation uncovered additional violations, including the hiring of employees who were not disclosed to the Department and were paid off the books, conducting an unlicensed, and thus illegal, mobile check-cashing business; and engaging in an illegal check-cashing scheme that circumvented Federal and state banking laws by structuring numerous transactions and falsifying business records to make it appear that the checks were cashed on several different dates, when they were in fact all cashed on a single date.

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