The Federal Reserve (search) on Friday ordered Riggs Bank (RIGS) to take corrective measures to prevent money laundering a day after Treasury fined it a record $25 million for its handling of millions of dollars in foreign-held accounts probed for possible links to terrorism financing.

In the order issued by the central bank, called a cease and desist order, Riggs agreed to take actions such as hiring an independent consultant to conduct a review. Its operation in Miami — which Riggs plans to close — will be required to retain an outside consultant to review previous account transactions for possible suspicious activity.

The Federal Reserve has jurisdiction over bank holding companies. The Atlanta Fed had previously advised Riggs's Miami-based subsidiary of deficiencies in its compliance with laws to prevent money laundering, the order noted.

The action followed the $25 million civil fine against the midsize Washington bank, which has a near-exclusive franchise on business with the capital's diplomatic community. The fine, which had been expected, is the largest ever imposed on a financial institution for such violations, experts said.

The Treasury Department's Office of the Comptroller of the Currency (search) issued the fine in an order made public late Thursday, after weeks of negotiations between Riggs officials and banking regulators.

"Riggs failed to properly monitor, and report as suspicious, transactions involving tens of millions of dollars in cash withdrawals, international drafts that were returned to the bank, and numerous sequentially numbered cashiers' checks," the office said.

In addition to the now-closed accounts that diplomats from Saudi Arabia controlled, the order by the comptroller's office mentioned accounts held by officials of Equatorial Guinea.

The order requires Riggs to make special reviews of its operations and account transactions and gives regulators advance notice of any dividend payments to shareholders.

In agreeing to the fine and the orders, Riggs did not admit to or deny wrongdoing in agreeing to the fine.

"Riggs is 100-percent committed to fulfilling all of our regulatory responsibilities and to doing our part to protect the financial system, and we will hasten our efforts toward these goals," the bank said in a statement Thursday night.