Gibraltar Private Bank and Trust has been served with a cease and desist order from regulators, citing unsound banking practices related to its Bank Secrecy Act and Anti-Money Laundering policies and procedures, as well as problem loans, according to the Miami Herald.

The privately held Coral Gables-based bank, which caters to doctors, lawyers and other professionals and entrepreneurs, has had clients affected by the economic downturn, said Steve Hayworth, Gibraltar's founder, chairman and chief executive.

"Clearly over the last few years it's been a difficult environment for all Florida banks - all banks really,'' Hayworth said.

Among Gibraltar's clients was the now defunct law firm of Scott Rothstein, who pleaded guilty in January to racketeering charges in masterminding a $1.2 billion Ponzi scheme.

Rothstein also acquired a 5 per cent stake in the bank in September 2009 when Hayworth led an investor group in buying Gibraltar back from Boston Private Financial Holdings. Those shares are now in the hands of the federal government.

Hayworth said Gibraltar is taking the enforcement action, its first ever, "very seriously.'' The bank has already taken several steps to comply with the order, including beefing up its Bank Secrecy Act staff, both in the level of experience and number of personnel, Hayworth said.

Gibraltar has also ramped up the loan workout department that it created last year, adding more staff during the first half of this year.

And the bank has hired its first in-house general counsel, who has a strong Bank Secrecy Act and compliance background, Hayworth said. And it has enhanced its training program related to the Bank Secrecy Act.

Among other requirements of the 16-page order, Gibraltar is barred from granting any dividends without regulatory approval, and it shall not change any senior executive officer or director's compensation or benefits agreement without notifying regulators.

Founded in 1994, Gibraltar had $1.6 billion in assets on June 30, 2010, and $732 million in assets under management. The bank posted a net loss of $805,000 during the second quarter, primarily due to provisions for loan losses.