CONFIDENTIAL TREATMENT REQUESTED
MANAGED SERVICES AGREEMENT
by and between
BELMONT RIDGE BANK NATIONAL ASSOCIATION
a National Banking Association chartered under 12 U.S.C. § 21 et seq.
OCC Charter No. 48271
680 Lexington Avenue, 22nd Floor, New York, NY 10022
("Client" or "BRB")
and
PINNACLE COMPLIANCE SOLUTIONS LLC
a New York Limited Liability Company
90 Broad Street, 20th Floor, New York, NY 10004
("Service Provider" or "Pinnacle")
Effective Date: February 10, 2025
SOW Reference: PCS-BRB-2025-0012
Prepared by Outside Counsel:
Calderwood & Harkness LLP
1285 Avenue of the Americas, 40th Floor
New York, NY 10019
Matter No. 1045-00002
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RECITALS
WHEREAS, Belmont Ridge Bank National Association ("BRB") is a federally chartered national banking association organized under 12 U.S.C. § 21 et seq., holding OCC Charter No. 48271 and FDIC Certificate No. 31845, and is a wholly owned subsidiary of Belmont Ridge Financial Group, Inc. ("BRFG"), a Delaware corporation and bank holding company listed on the New York Stock Exchange under the ticker symbol BRFG, with its principal offices located at 680 Lexington Avenue, 22nd Floor, New York, NY 10022;
WHEREAS, BRB operates core business lines including retail banking, commercial lending, wealth management, and fintech Banking-as-a-Service ("BaaS") partnerships, with approximately fourteen (14) active fintech sponsor relationships through which BRB provides banking products and services to end users;
WHEREAS, on January 15, 2025, the Office of the Comptroller of the Currency (the "OCC") issued Consent Order No. OCC-2025-003 (the "Consent Order") against BRB, identifying significant deficiencies in BRB's Bank Secrecy Act / Anti-Money Laundering ("BSA/AML") compliance program, including but not limited to: (i) inadequate screening against the Office of Foreign Assets Control ("OFAC") sanctions lists; (ii) deficient Suspicious Activity Report ("SAR") filing timeliness and narrative quality; (iii) insufficient Customer Due Diligence and Enhanced Due Diligence ("CDD/EDD") for high-risk customers, particularly those onboarded through BaaS fintech partner channels; (iv) inadequate transaction monitoring model validation and tuning; and (v) board-level oversight deficiencies in BSA/AML program governance;
WHEREAS, the Consent Order requires BRB to submit a Comprehensive Remediation Action Plan (the "Remediation Action Plan" or "RAP") to the OCC by May 15, 2025, and to achieve full compliance program implementation by February 15, 2026;
WHEREAS, BRB has engaged Calderwood & Harkness LLP ("Outside Counsel") as outside regulatory counsel to advise BRB in connection with the Consent Order and remediation efforts, and has further engaged Thornfield Consulting Group LLC (the "Independent Consultant") as the OCC-mandated independent consultant under engagement reference TCG-BRB-2025-001, to advise on and oversee the remediation program pursuant to Article VII of the Consent Order;
WHEREAS, BRB requires temporary compliance staffing resources to support its remediation efforts across multiple critical workstreams, including: (i) clearance of a SAR investigation backlog consisting of approximately 2,400 unreviewed alerts as of September 2024; (ii) a SAR lookback project encompassing retrospective review of historical transactions and alert dispositions; (iii) CDD/EDD remediation for approximately 47,000 high-risk customer accounts; and (iv) ongoing transaction monitoring alert review and disposition;
WHEREAS, Pinnacle Compliance Solutions LLC ("Pinnacle") is a New York limited liability company possessing specialized expertise and operational capacity to provide qualified BSA/AML compliance professionals on a managed services basis to financial institutions undertaking regulatory remediation programs;
WHEREAS, the Board of Directors of BRB has authorized a total remediation budget of Forty-Two Million Five Hundred Thousand Dollars ($42,500,000) (exclusive of the Fourteen Million Five Hundred Thousand Dollars ($14,500,000) civil money penalty assessed under the Consent Order), of which Three Million Six Hundred Thousand Dollars ($3,600,000) has been allocated to temporary compliance staffing services;
WHEREAS, the parties wish to set forth the terms and conditions under which Pinnacle will provide managed compliance staffing services to BRB in support of BRB's BSA/AML remediation program;
NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations, and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I — DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined in this Article I shall have the meanings ascribed to them elsewhere in this Agreement.
Section 1.1. "Agreement" means this Managed Services Agreement, including all Exhibits attached hereto and incorporated herein by reference, as the same may be amended, modified, or supplemented from time to time in accordance with Section 17.4.
Section 1.2. "Authorized Representative" means (a) for BRB: Thomas Ikeda, BSA Officer / AML Program Director; Patricia Langston, Chief Compliance Officer; and Gregory Nardone, General Counsel; and (b) for Pinnacle: Andrea Solis, Director of Managed Services. Either party may designate additional or replacement Authorized Representatives by written notice to the other party in accordance with Section 17.5.
Section 1.3. "BSA/AML Laws" means, collectively, the Bank Secrecy Act (31 U.S.C. § 5311 et seq.), the USA PATRIOT Act (Pub. L. 107-56), the implementing regulations promulgated thereunder (31 C.F.R. Chapter X), OFAC regulations (31 C.F.R. Part 500 et seq.), all applicable guidance issued by the Financial Crimes Enforcement Network ("FinCEN"), and all applicable supervisory guidance, bulletins, advisories, and directives issued by the OCC, in each case as amended, supplemented, or replaced from time to time.
Section 1.4. "BRB" or "Client" means Belmont Ridge Bank National Association, a national banking association chartered under 12 U.S.C. § 21 et seq., OCC Charter No. 48271, FDIC Certificate No. 31845.
Section 1.5. "BRFG" means Belmont Ridge Financial Group, Inc., a Delaware corporation and bank holding company (NYSE: BRFG), and the sole parent and shareholder of BRB.
Section 1.6. "CDD/EDD" means Customer Due Diligence and Enhanced Due Diligence, as those terms are understood under 31 C.F.R. § 1020.210, the FinCEN CDD Rule (81 FR 29398), and applicable OCC supervisory guidance.
Section 1.7. "Confidential Information" has the meaning set forth in Section 6.1 of this Agreement.
Section 1.8. "Consent Order" means OCC Consent Order No. OCC-2025-003, effective January 15, 2025, as the same may be amended, modified, superseded, or terminated by the OCC.
Section 1.9. "Effective Date" means February 10, 2025.
Section 1.10. "Engagement Period" means the twelve (12)-month term commencing on the Effective Date (February 10, 2025) and concluding on February 9, 2026, unless extended pursuant to Section 9.1 or terminated earlier pursuant to Article IX.
Section 1.11. "FTE" or "Full-Time Equivalent" means one individual providing services on a full-time basis, defined as a minimum of forty (40) hours per week, exclusive of federal and New York State holidays observed by BRB and approved leave.
Section 1.12. "Independent Consultant" means Thornfield Consulting Group LLC, engaged pursuant to Article VII of the Consent Order under engagement reference TCG-BRB-2025-001, to serve as the OCC-mandated independent consultant overseeing BRB's remediation efforts.
Section 1.13. "Key Personnel" means Andrea Solis, who shall serve as Pinnacle's primary engagement lead, and such other senior personnel specifically identified in the Statement of Work (Exhibit A) or otherwise designated as Key Personnel by written agreement of the parties.
Section 1.14. "Managed Staff" means the BSA/AML compliance professionals provided by Pinnacle to BRB under this Agreement, as more particularly described in Article III.
Section 1.15. "OCC" means the Office of the Comptroller of the Currency, an independent bureau of the United States Department of the Treasury.
Section 1.16. "Outside Counsel" means Calderwood & Harkness LLP, 1285 Avenue of the Americas, 40th Floor, New York, NY 10019, engaged as BRB's outside regulatory counsel in connection with the Consent Order and related remediation matters.
Section 1.17. "Pinnacle" or "Service Provider" means Pinnacle Compliance Solutions LLC, a New York limited liability company, with its principal office at 90 Broad Street, 20th Floor, New York, NY 10004.
Section 1.18. "Remediation Action Plan" or "RAP" means the comprehensive remediation plan required to be submitted to the OCC by May 15, 2025, in accordance with the terms and conditions of the Consent Order.
Section 1.19. "SAR" means a Suspicious Activity Report as defined under 31 C.F.R. § 1020.320 and filed with FinCEN through the BSA E-Filing System.
Section 1.20. "Services" means the managed compliance staffing services described in Article II of this Agreement and in the Statement of Work attached hereto as Exhibit A, as the same may be modified from time to time by mutual written agreement.
Section 1.21. "Statement of Work" or "SOW" means the detailed scope of work, staffing plan, deployment schedule, deliverables, and related specifications set forth in Exhibit A attached hereto and incorporated herein by reference (SOW Ref: PCS-BRB-2025-0012).
Section 1.22. "TMS" means Transaction Monitoring System, which for purposes of this Agreement refers to the Veridian Analytics Inc. transaction monitoring platform currently deployed at BRB in version 8.3 (TMS v.8.3), to be upgraded to version 10.0 (TMS v.10.0) during the Engagement Period.
ARTICLE II — SCOPE OF SERVICES
Section 2.1 — General Scope
Pinnacle shall provide thirty (30) full-time-equivalent BSA/AML compliance professionals (the "Managed Staff") to BRB for the duration of the Engagement Period to support BRB's BSA/AML remediation efforts undertaken in response to and in compliance with the Consent Order. The Services shall encompass the staffing, training support, and operational support activities described in this Article II and in the Statement of Work attached hereto as Exhibit A.
The Services provided by Pinnacle hereunder are supplemental in nature and are intended to augment BRB's existing BSA/AML department, which as of the Effective Date consists of approximately sixty-two (62) full-time permanent BSA/AML compliance employees, with an additional fifteen (15) permanent FTE positions authorized and in the process of being recruited. The Managed Staff are not intended to replace BRB's permanent compliance workforce but rather to provide the additional capacity required to address the specific remediation workstreams and timelines mandated by the Consent Order.
All Managed Staff shall perform Services at BRB's direction and under the operational supervision of BRB's BSA Officer, Thomas Ikeda, and Chief Compliance Officer, Patricia Langston, in accordance with BRB's policies, procedures, and quality standards. BRB shall retain ultimate decision-making authority with respect to all compliance determinations, including but not limited to SAR filing decisions, CDD/EDD approvals and account closures, OFAC interdiction actions, and alert disposition classifications.
Section 2.2 — Service Categories
The Managed Staff shall provide services across the following service categories, as more fully described in the Statement of Work (Exhibit A):
(a) SAR Investigation and Filing Support. Managed Staff assigned to the SAR Investigation workstream shall support BRB's efforts to review and disposition the backlog of approximately two thousand four hundred (2,400) unreviewed suspicious activity alerts that had accumulated as of September 2024. Managed Staff in this category shall conduct investigations of flagged transactions and customer activity, perform relevant research and analysis using BRB's case management systems and available databases, and draft SAR narratives for review and approval by BRB's permanent compliance staff and team leads. A primary objective of this workstream is to support BRB in reducing the average SAR filing time from the current average of seventy-eight (78) days to within thirty (30) days of alert generation, consistent with the performance improvement targets established in the Remediation Action Plan. Managed Staff shall adhere to BRB's SAR narrative drafting standards, investigation protocols, and filing procedures in all respects.
(b) SAR Lookback Project Support. Managed Staff shall support BRB's retrospective review of historical transactions and alerts (the "SAR Lookback Project") as defined in the lookback scope and methodology approved by Outside Counsel and the Independent Consultant. The SAR Lookback Project carries an estimated total project budget of Five Million Five Hundred Thousand Dollars ($5,500,000), of which the Pinnacle staffing component constitutes a portion. Managed Staff assigned to this workstream shall perform file reviews, transaction analysis, and documentation tasks as directed by Thomas Ikeda and Outside Counsel (Philip Hartmann, Calderwood & Harkness LLP). All work product generated in connection with the SAR Lookback Project shall be subject to the Privilege Protocol established by Calderwood & Harkness LLP.
(c) Transaction Monitoring Alert Review. Managed Staff assigned to the Transaction Monitoring workstream shall conduct daily review and disposition of transaction monitoring alerts generated by the Veridian TMS (currently v.8.3, and subsequently v.10.0 upon deployment). For reference, BRB's calendar year 2024 alert volume was approximately forty-one thousand five hundred (41,500) alerts with a SAR conversion rate of approximately 9.3%. Managed Staff shall review alerts in accordance with BRB's alert disposition procedures, escalate alerts warranting further investigation, and document all disposition decisions in BRB's case management system.
(d) CDD/EDD Remediation Support. Managed Staff assigned to the CDD/EDD Remediation workstream shall support BRB's efforts to remediate approximately forty-seven thousand (47,000) high-risk customer accounts that have been identified as lacking adequate CDD/EDD documentation. The majority of these accounts were onboarded through BRB's BaaS fintech partner channels. Managed Staff shall conduct customer outreach, collect and organize required documentation, perform initial CDD/EDD reviews, and prepare account files for final review and approval by BRB permanent staff. Specific remediation milestones require fifty percent (50%) completion (approximately 23,500 accounts) by July 15, 2025, and one hundred percent (100%) completion (47,000 accounts) by January 15, 2026.
(e) OFAC Screening Support. Managed Staff assigned to the OFAC Screening workstream shall assist BRB with the review and disposition of OFAC screening hits across all business lines, including BaaS channels. For reference, BRB's calendar year 2024 volume was approximately fourteen thousand three hundred twenty (14,320) OFAC screening hits with a 99.9% false-positive rate (twelve (12) true matches identified). Managed Staff shall perform initial hit review and disposition in accordance with BRB's OFAC compliance procedures and escalate potential true matches to BRB's designated OFAC compliance officer for final determination.
(f) Quality Assurance Support. Managed Staff, as directed by BRB, shall participate in BRB's quality assurance activities, including SAR quality assurance sampling, CDD/EDD review verification, and alert disposition quality reviews. All quality assurance activities shall be conducted under the supervision of BRB permanent staff and in accordance with the SAR Quality Assurance Framework established by Outside Counsel.
Section 2.3 — Alignment with Consent Order Milestones
The Services shall be planned, prioritized, and executed so as to support BRB's achievement of the following Consent Order and remediation milestones. While Pinnacle is not independently responsible for the achievement of these milestones, Pinnacle shall deploy its Managed Staff in a manner that maximizes BRB's ability to meet these deadlines:
(a) March 31, 2025: Interim SAR backlog status report to the OCC, demonstrating progress toward clearance of the 2,400-alert backlog.
(b) May 15, 2025: Submission of the Comprehensive Remediation Action Plan to the OCC.
(c) June 30, 2025: SAR backlog clearance target — all 2,400 unreviewed alerts fully dispositioned.
(d) July 15, 2025: CDD/EDD remediation fifty percent (50%) milestone — approximately 23,500 high-risk customer accounts remediated.
(e) September 15, 2025: First quarterly progress report submitted to the OCC.
(f) December 15, 2025: Second quarterly progress report submitted to the OCC.
(g) January 15, 2026: CDD/EDD remediation one hundred percent (100%) milestone — all 47,000 high-risk customer accounts remediated.
(h) February 15, 2026: Full compliance program implementation and BRB self-certification to the OCC.
Pinnacle shall cooperate with BRB in adjusting staffing allocations, work priorities, and productivity targets as necessary to support the achievement of these milestones. BRB shall provide Pinnacle with reasonable advance notice of changes to remediation milestones or priorities resulting from OCC directives, Independent Consultant recommendations, or evolving remediation needs.
Section 2.4 — Exclusions
Notwithstanding any other provision of this Agreement, the following activities are expressly excluded from the scope of Services:
(a) Legal Advice. Pinnacle shall not provide legal advice or act as legal counsel to BRB. Managed Staff are not licensed attorneys (unless otherwise noted in individual qualifications) and shall not render legal opinions, provide legal analysis, or hold themselves out as providing legal services. All legal questions shall be referred to BRB's General Counsel (Gregory Nardone) or Outside Counsel (Calderwood & Harkness LLP).
(b) Direct Regulatory Communication. Pinnacle shall not communicate directly with the OCC, FinCEN, the Independent Consultant (Thornfield Consulting Group LLC), or any other federal or state regulatory authority regarding BRB's compliance program, the Consent Order, or the remediation effort without the prior written authorization of BRB's General Counsel or Outside Counsel (Philip Hartmann, Calderwood & Harkness LLP). Any requests from regulators or the Independent Consultant directed to Pinnacle or Managed Staff shall be immediately forwarded to BRB's General Counsel.
(c) Technology Systems. Pinnacle is not responsible for the design, implementation, operation, maintenance, or support of BRB's technology systems, including the Veridian TMS (v.8.3 or v.10.0), OFAC screening platforms, case management systems, or any other BRB technology infrastructure. Managed Staff shall use such systems as end users only, in accordance with BRB's access policies and procedures.
(d) Final Compliance Determinations. While Managed Staff may prepare preliminary analyses, recommendations, and draft work product, all final compliance determinations — including SAR filing decisions, CDD/EDD approval or rejection, OFAC interdiction actions, and account closure decisions — shall be made by BRB's authorized permanent compliance personnel.
ARTICLE III — STAFFING REQUIREMENTS AND QUALIFICATIONS
Section 3.1 — Staffing Commitment
Pinnacle shall provide and maintain a minimum of thirty (30) FTEs throughout the Engagement Period in accordance with the staffing plan and deployment schedule set forth in this Article III and in the Statement of Work (Exhibit A). The thirty (30)-FTE commitment represents Pinnacle's core obligation under this Agreement, and Pinnacle acknowledges that BRB's ability to meet the Consent Order milestones is directly dependent upon Pinnacle's timely and sustained delivery of qualified personnel.
(a) Staffing Ramp-Up. Recognizing the urgency of the remediation effort and the near-term reporting deadlines imposed by the Consent Order, Pinnacle shall deploy Managed Staff on an accelerated basis as follows:
(i) Phase 1 — Initial Deployment (Business Days 1 through 10): Pinnacle shall deploy a minimum of fifteen (15) FTEs within ten (10) business days of the Effective Date (i.e., by no later than February 25, 2025). Initial deployment priority shall be assigned to the SAR Investigation and CDD/EDD Remediation workstreams.
(ii) Phase 2 — Full Deployment (Business Days 11 through 20): Pinnacle shall achieve the full thirty (30)-FTE deployment within twenty (20) business days of the Effective Date (i.e., by no later than March 10, 2025). Full deployment shall coincide with the commencement of Thornfield Consulting Group LLC's on-site assessment activities, scheduled to begin on or about March 1, 2025.
(b) Staffing Composition. The thirty (30) FTEs shall be allocated among service categories as follows, subject to adjustment as provided below and as further detailed in Exhibit A:
The Team Leads / Senior Analysts referenced above are included within the total thirty (30)-FTE count and shall serve both production and supervisory functions within their respective workstreams.
(c) Reallocation. BRB reserves the right to adjust the allocation of FTEs among service categories upon thirty (30) days' prior written notice to Pinnacle. Pinnacle shall use commercially reasonable efforts to accommodate reallocation requests, provided that significant reallocations may require corresponding adjustments to personnel qualifications and a reasonable transition period not to exceed fifteen (15) business days.
Section 3.2 — Qualification Requirements
All Managed Staff deployed by Pinnacle under this Agreement shall possess, at minimum, the following qualifications:
(a) A bachelor's degree from an accredited college or university;
(b) One of the following: (i) current Certified Anti-Money Laundering Specialist ("CAMS") certification issued by ACAMS, or (ii) an equivalent professional certification such as Certified Financial Crimes Specialist ("CFCS") or Certified Fraud Examiner ("CFE"), or (iii) a minimum of three (3) years of direct, hands-on BSA/AML compliance experience in a financial institution, regulatory agency, or consulting environment;
(c) Demonstrated familiarity with the BSA/AML regulatory framework, including FinCEN reporting requirements (SARs, CTRs, CMIRs), OFAC sanctions screening, the FinCEN CDD Rule, and OCC supervisory expectations for national banks;
(d) Experience with transaction monitoring systems, with preference given to candidates with prior experience using the Veridian Analytics platform or comparable tier-one TMS platforms;
(e) Proficiency in SAR narrative drafting and investigation documentation, including the ability to produce clear, comprehensive, and regulatory-quality SAR narratives;
(f) Strong analytical, organizational, and written communication skills; and
(g) Authorization to work in the United States and ability to obtain and maintain BRB facility access credentials.
In addition to the foregoing requirements applicable to all Managed Staff, Team Leads and Senior Analysts shall possess:
(h) A minimum of five (5) years of BSA/AML compliance experience;
(i) Prior supervisory experience, including demonstrated ability to review and quality-check the work of junior analysts;
(j) Familiarity with regulatory examination processes and remediation program execution; and
(k) Current CAMS certification (no substitute accepted for Team Lead positions).
Section 3.3 — Background Checks and Screening
Prior to the deployment of any Managed Staff member to BRB, Pinnacle shall conduct comprehensive background checks and screening, which shall include at a minimum:
(a) A criminal background check covering all jurisdictions of residence for the preceding seven (7) years;
(b) A consumer credit report;
(c) Verification of employment history for the preceding five (5) years;
(d) Verification of educational credentials (highest degree obtained);
(e) Screening against applicable government sanctions and watchlists, including the OFAC Specially Designated Nationals and blocked Persons List ("SDN List"), the Bureau of Industry and Security ("BIS") Entity List, and the FinCEN 314(a) list; and
(f) Professional reference checks (minimum two (2) professional references).
Pinnacle shall retain documentation of all background checks and screening results in accordance with applicable law and shall make such documentation available to BRB upon request. BRB reserves the right, in its sole and reasonable discretion, to reject or require the replacement of any Managed Staff member whose background check results do not meet BRB's internal standards, regulatory requirements, or risk tolerance, including but not limited to any individual who has a criminal conviction, pending criminal charge, adverse credit history, or sanctions list match that, in BRB's judgment, would be inconsistent with service in a BSA/AML compliance function.
Section 3.4 — Replacement of Personnel
(a) Vacancy Replacement. In the event any Managed Staff member is unable to perform Services due to resignation, termination, incapacity, personal leave, or any other cause, Pinnacle shall provide a qualified replacement who satisfies all requirements of this Article III within five (5) business days of the vacancy arising. During any vacancy period, the understaffing adjustment provisions of Section 5.3 shall apply.
(b) Cause Removal and Replacement. BRB may, at any time and in its sole discretion, request the removal and replacement of any Managed Staff member for cause, including but not limited to: (i) performance deficiencies identified through quality review or supervision; (ii) violation of BRB policies, procedures, or codes of conduct; (iii) breach of confidentiality obligations; (iv) regulatory concerns; or (v) conduct that, in BRB's judgment, poses a risk to BRB's remediation efforts or regulatory standing. Upon such a request, Pinnacle shall remove the individual from BRB premises and system access within twenty-four (24) hours and shall provide a qualified replacement within three (3) business days.
(c) Bench Maintenance. Pinnacle shall maintain a bench of pre-qualified, background-checked candidates sufficient to ensure continuity of Services and timely replacement of personnel. At all times during the Engagement Period, Pinnacle shall maintain a minimum bench depth of five (5) pre-qualified candidates ready for deployment.
Section 3.5 — Key Personnel
Andrea Solis shall serve as Pinnacle's primary engagement lead and principal point of contact throughout the Engagement Period. Ms. Solis shall be responsible for overall management of Pinnacle's performance under this Agreement, coordination with BRB's Authorized Representatives, and resolution of staffing and operational issues.
Pinnacle shall not replace, reassign, or otherwise remove Andrea Solis from the engagement without the prior written consent of BRB, which consent shall not be unreasonably withheld, conditioned, or delayed. In the event Ms. Solis becomes unavailable due to circumstances beyond Pinnacle's control (e.g., illness, personal emergency, or departure from Pinnacle), Pinnacle shall immediately notify BRB and shall propose a replacement of comparable or superior experience and qualifications for BRB's approval within five (5) business days.
ARTICLE IV — SUPERVISION AND OPERATIONAL CONTROL
Section 4.1 — BRB Supervision
All Managed Staff shall work under the day-to-day operational direction and supervision of BRB personnel. The primary supervisory structure shall be as follows:
(a) Thomas Ikeda, BSA Officer / AML Program Director — shall serve as the primary operational supervisor for all Managed Staff, with authority to direct the daily activities, work assignments, priorities, and workflow of Managed Staff across all service categories.
(b) Patricia Langston, Chief Compliance Officer — shall serve as the escalation authority for operational issues requiring senior management attention and shall exercise oversight of the overall remediation program in which the Managed Staff participate.
BRB shall provide Managed Staff with access to all systems, tools, applications, policies, procedures, training materials, and reference documents reasonably necessary for the performance of the Services. BRB shall designate appropriate BRB permanent staff to serve as workstream leads and subject matter contacts for each service category, to facilitate the integration of Managed Staff into BRB's operational workflows.
BRB retains ultimate responsibility for all BSA/AML compliance decisions arising from or related to the work performed by Managed Staff. Without limitation, this includes: (i) all SAR filing determinations and final SAR narrative approval; (ii) all CDD/EDD approval, rejection, and account action decisions; (iii) all OFAC interdiction and blocking decisions; (iv) all transaction monitoring alert escalation and closure decisions; and (v) all communications with the OCC, FinCEN, the Independent Consultant, law enforcement, and other government authorities. The Managed Staff shall at all times function in a supporting capacity, and nothing in this Agreement shall be construed to vest in Pinnacle or the Managed Staff any independent decision-making authority over BRB's compliance functions.
Section 4.2 — Pinnacle Management Oversight
Notwithstanding BRB's operational direction of Managed Staff as described in Section 4.1, Pinnacle shall retain administrative and employment management responsibility for all Managed Staff, including:
(a) Payroll processing and compensation;
(b) Employee benefits administration;
(c) Workers' compensation insurance and claims management;
(d) Employment-related tax withholding and reporting;
(e) Compliance with applicable employment and labor laws, including the Fair Labor Standards Act, New York Labor Law, and anti-discrimination statutes; and
(f) Human resources functions including hiring, discipline, and termination of Managed Staff.
Andrea Solis, as Pinnacle's engagement lead, shall provide ongoing management support for the engagement, conduct periodic performance reviews of Managed Staff, monitor quality and productivity metrics, and serve as the primary escalation point for staffing and operational issues. Ms. Solis shall maintain regular communication with BRB's BSA Officer (Thomas Ikeda) and shall participate in weekly status calls to discuss staffing levels, performance, operational issues, and upcoming priorities. In addition, Pinnacle shall provide monthly staffing reports in the format and with the content specified in Section 8.2 and the Statement of Work (Exhibit A).
Section 4.3 — Quality Control
BRB shall implement and maintain quality review protocols for all work product generated by Managed Staff. Pinnacle acknowledges the critical importance of work product quality in the context of BRB's regulatory remediation and agrees to cooperate fully with BRB's quality assurance framework. Specific quality control measures shall include:
(a) SAR Narrative Quality Review: BRB shall conduct random quality review sampling of a minimum of ten percent (10%) of SAR narratives drafted by Managed Staff. Quality reviews shall be performed by BRB's permanent compliance staff and shall evaluate narrative completeness, accuracy, clarity, regulatory compliance, and adherence to BRB's drafting standards.
(b) SAR Filing Recommendation Review: One hundred percent (100%) of SAR filing recommendations prepared by Managed Staff shall be reviewed and approved by a BRB Team Lead or senior permanent analyst prior to submission to the BSA Officer or designee for final filing authorization.
(c) CDD/EDD Remediation Documentation Review: BRB shall conduct periodic quality checks on CDD/EDD remediation documentation prepared by Managed Staff, including verification of documentation completeness, accuracy of risk assessments, and adherence to BRB's CDD/EDD policies and procedures.
(d) Alert Disposition Quality Review: BRB shall conduct periodic quality reviews of transaction monitoring alert dispositions completed by Managed Staff, assessing the accuracy and appropriateness of disposition classifications.
Pinnacle shall cooperate with BRB's internal quality assurance framework and with the SAR Quality Assurance Framework established by Outside Counsel (Calderwood & Harkness LLP). Quality review results shall be shared with Andrea Solis on a regular basis. Pinnacle shall promptly investigate and remediate any identified quality deficiencies, including providing additional training, counseling, or replacement of underperforming personnel as warranted.
Section 4.4 — Coordination with Third Parties
Managed Staff shall cooperate with the Independent Consultant (Thornfield Consulting Group LLC) to the extent directed by BRB's Authorized Representatives. Such cooperation may include providing access to work product samples, responding to questions about processes and procedures, and participating in interviews or reviews conducted by Thornfield as part of its assessment and validation activities.
Under no circumstances shall Managed Staff communicate directly with Thornfield Consulting Group LLC, the OCC, FinCEN, or any other federal or state regulator without the prior written authorization of BRB's General Counsel (Gregory Nardone) or Outside Counsel (Philip Hartmann, Calderwood & Harkness LLP). Any unsolicited communication or request from Thornfield, the OCC, or any other regulatory authority directed to Pinnacle or any Managed Staff member shall be immediately reported to BRB's General Counsel and shall not be responded to without express authorization.
ARTICLE V — COMPENSATION AND PAYMENT
Section 5.1 — Fee Structure
In consideration of Pinnacle's provision of the Services described herein, BRB shall pay Pinnacle a monthly fee of Three Hundred Thousand Dollars ($300,000), calculated as thirty (30) FTEs multiplied by Ten Thousand Dollars ($10,000) per FTE per month. The total contract value for the twelve (12)-month Engagement Period is Three Million Six Hundred Thousand Dollars ($3,600,000).
The per-FTE rate of Ten Thousand Dollars ($10,000) per month is fully loaded and inclusive of all employment-related costs and expenses borne by Pinnacle, including without limitation: (a) base salary and any incentive compensation paid to Managed Staff; (b) employer's share of payroll taxes (FICA, FUTA, SUTA); (c) health insurance, dental insurance, vision insurance, and other employee benefits; (d) workers' compensation insurance premiums; (e) professional liability insurance allocable to the engagement; (f) Pinnacle's management overhead, including the costs of Andrea Solis and other Pinnacle management personnel; and (g) Pinnacle's profit margin. BRB shall have no obligation to pay any compensation, benefits, or other amounts directly to any Managed Staff member.
Section 5.2 — Invoicing and Payment Terms
Pinnacle shall submit monthly invoices to BRB within five (5) business days following the end of each calendar month during the Engagement Period. Each invoice shall be submitted in a format reasonably acceptable to BRB and shall include the following detail:
(a) The number of FTEs deployed during the invoice month, broken down by service category;
(b) The number of hours worked by each FTE during the invoice month;
(c) Identification of any vacancies, replacements, or staffing changes during the invoice month;
(d) Any pro-rata adjustments for understaffing or partial-month deployments pursuant to Section 5.3;
(e) Any approved extraordinary expenses pursuant to Section 5.5; and
(f) A summary calculation of the total amount due.
Invoices shall be submitted electronically to the attention of Thomas Ikeda, BSA Officer, and to BRB's Accounts Payable department at the address or email designated by BRB from time to time.
BRB shall pay all undisputed invoice amounts within thirty (30) days of receipt of a complete and accurate invoice (net 30). Payments shall be made by wire transfer or ACH to the account designated by Pinnacle in writing. In the event BRB disputes any portion of an invoice, BRB shall pay the undisputed portion within the net-30 payment period and shall provide Pinnacle with a written explanation of the disputed amount within fifteen (15) business days of invoice receipt. Disputed amounts shall be resolved through the dispute resolution procedures set forth in Article XII.
Section 5.3 — Adjustments for Understaffing
If Pinnacle fails to maintain the thirty (30)-FTE staffing commitment for any calendar month (excluding the approved ramp-up period described in Section 3.1(a) and reasonable replacement periods under Section 3.4 not to exceed five (5) business days per vacancy), the monthly fee shall be prorated based on the actual number of FTEs deployed during the relevant month. The prorated fee shall be calculated as the actual weighted average number of FTEs deployed during the month multiplied by Ten Thousand Dollars ($10,000).
In addition to fee proration, chronic understaffing — defined as Pinnacle's failure to maintain at least twenty-seven (27) FTEs deployed for three (3) or more consecutive weeks — shall constitute a material breach of this Agreement, entitling BRB to exercise its rights under Section 9.3, including termination for cause.
Section 5.4 — Additional Staffing
BRB may request that Pinnacle provide additional FTEs beyond the thirty (30)-FTE commitment upon thirty (30) days' prior written notice to Pinnacle. Additional FTEs shall be billed at the same rate of Ten Thousand Dollars ($10,000) per FTE per month, subject to Pinnacle's ability to source qualified personnel meeting the requirements of Section 3.2 within the requested timeframe.
Any increase in the total contract value exceeding ten percent (10%) of the base contract value (i.e., exceeding Three Hundred Sixty Thousand Dollars ($360,000) in additional fees) shall require a formal written amendment to this Agreement executed by authorized representatives of both parties in accordance with Section 17.4.
Section 5.5 — Expenses
The monthly per-FTE fee set forth in Section 5.1 is inclusive of all ordinary operating expenses incurred by Pinnacle in connection with the provision of Services, including but not limited to personnel costs, office overhead, management time, administrative support, and standard business expenses.
BRB shall not be responsible for, and shall not reimburse Pinnacle for, any travel, lodging, transportation, meals, equipment, supplies, or other expenses unless such expenses are (a) extraordinary in nature and outside the scope of ordinary operating expenses, (b) approved in writing by a BRB Authorized Representative in advance of being incurred, and (c) billed at cost, supported by itemized receipts and documentation. All approved extraordinary expense reimbursement requests shall be included in Pinnacle's monthly invoices with supporting documentation.
ARTICLE VI — CONFIDENTIALITY
Section 6.1 — Confidential Information
As used in this Agreement, "Confidential Information" means all non-public information of BRB, BRFG, or any of their affiliates that is disclosed to, made available to, or otherwise accessible by Pinnacle or any Managed Staff member in connection with the performance of the Services, regardless of the form or medium in which such information is communicated or maintained (including oral, written, electronic, or visual form). Without limitation, Confidential Information includes:
(a) Customer data and personally identifiable information ("PII"), including names, addresses, Social Security numbers, dates of birth, account numbers, and financial account information;
(b) Transaction data, including deposit, withdrawal, transfer, and payment records;
(c) Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs), including filings, drafts, supporting documentation, work papers, and related investigative materials;
(d) OFAC screening data, including hit logs, disposition records, and interdiction actions;
(e) CDD/EDD files, including customer risk assessments, documentation, and review notes;
(f) Transaction monitoring alert data, including alert parameters, disposition histories, and model tuning information;
(g) BRB's BSA/AML policies, procedures, internal controls, risk assessments, and program documentation;
(h) Internal audit reports, findings, and recommendations;
(i) Regulatory correspondence, examination reports, supervisory letters, and enforcement actions, including the Consent Order and all materials related thereto;
(j) Remediation Action Plan documentation, progress reports, and work product;
(k) Financial, business, and strategic information of BRB and BRFG;
(l) Information and communications subject to the attorney-client privilege or work-product doctrine belonging to BRB and its counsel, including but not limited to Calderwood & Harkness LLP; and
(m) Any other information designated as "Confidential," "Proprietary," or words of similar import by BRB, or that a reasonable person would understand to be confidential given the nature of the information and the circumstances of disclosure.
Pinnacle acknowledges that Confidential Information includes information subject to the protections of the Gramm-Leach-Bliley Act (15 U.S.C. § 6801 et seq.) and the regulations promulgated thereunder (including 12 C.F.R. Part 30, Appendix B), the Right to Financial Privacy Act (12 U.S.C. § 3401 et seq.), and applicable state privacy laws, including the New York SHIELD Act (N.Y. Gen. Bus. Law § 899-aa) and the California Consumer Privacy Act (Cal. Civ. Code § 1798.100 et seq.) to the extent applicable.
Section 6.2 — Obligations
Pinnacle shall hold all Confidential Information in strict confidence and shall not disclose, publish, release, or transfer any Confidential Information to any third party without the prior written consent of BRB, except: (a) as required by applicable law, regulation, or legal process (including subpoena or regulatory inquiry), provided that Pinnacle shall, to the extent legally permitted, provide BRB with prompt written notice prior to any such disclosure to allow BRB to seek protective measures; or (b) to Pinnacle's own legal counsel in connection with the enforcement or interpretation of this Agreement, subject to such counsel's agreement to maintain confidentiality.
Pinnacle shall limit access to Confidential Information to those Managed Staff members and Pinnacle personnel who have a legitimate need to know such information for the performance of the Services. Pinnacle shall not use Confidential Information for any purpose other than the performance of the Services under this Agreement.
All Managed Staff shall execute individual confidentiality and non-disclosure agreements in a form approved by BRB prior to their deployment. Pinnacle shall provide copies of all executed confidentiality agreements to BRB upon request.
Section 6.3 — SAR Confidentiality
Pinnacle and all Managed Staff are subject to the SAR confidentiality provisions of 31 U.S.C. § 5318(g)(2), which prohibit the unauthorized disclosure of SARs, the existence of SARs, and SAR-related information. Violations of SAR confidentiality may result in civil and criminal penalties.
Pinnacle shall train all Managed Staff on SAR confidentiality requirements prior to deployment and prior to their commencing any SAR-related work. Pinnacle shall maintain records of such training and shall provide evidence of training completion to BRB upon request. Pinnacle shall immediately notify BRB's General Counsel (Gregory Nardone) and BSA Officer (Thomas Ikeda) if Pinnacle becomes aware of any actual or suspected unauthorized disclosure of SAR or SAR-related information by any Managed Staff member.
Section 6.4 — Return and Destruction
Upon the expiration or termination of this Agreement for any reason, Pinnacle shall promptly (and in any event within fifteen (15) business days) return to BRB or destroy, at BRB's sole election, all Confidential Information in Pinnacle's possession or control, in whatever form or medium. Destruction shall be accomplished through means appropriate to the sensitivity of the information, including secure shredding of paper documents and secure deletion or degaussing of electronic media.