Money laundering: New York fines Chinese bank $215 million

Cites bank’s failure to scrutinise dubious money transfers

NEW YORK: New York’s state bank regulator fined the giant Agricultural Bank of China (AgBank) $215 million on Friday for violating anti-money laundering laws and obscuring suspicious transactions involving Russia, China, Afghanistan and other countries.

Citing a deliberate failure to scrutinise dubious money transfers, the Department of Financial Services (DFS) said the bank, the third-largest in the world, created “a substantial risk” that terrorist groups, sanctions-barred countries and criminals could have passed funds through the bank.

The bank had also silenced a whistle-blower who attempted to carry out internal investigations, according to the DFS.

The move by the powerful New York regulator followed a September action by the Federal Reserve, which ordered AgBank to improve internal controls against money laundering.

Natasha Taft, a former staffer, settled a lawsuit against the bank that month after claiming she had been forced out of her job after reporting potential violations to the Fed. DFS also said on Friday that bank staff had taken deliberate steps to hide US dollar transactions passing through its New York branch that could have been tied to violations of trade sanctions and anti-money laundering laws.

Bank examiners found the bank had used evasive transaction methods, including masking the true identity of parties to transactions using SWIFT, the global network which enables financial transfers. According to the DFS, the examiners identified unusually large round-dollar transactions between Chinese companies and counterparties in Russia and Yemen, dollar payments between a customer of Turkish Bank and a client at Afghan Bank whom the US Treasury had linked to the financial network used to fund drug trafficking.

“Certain invoices involving China and Russia appeared to be counterfeit or falsified, while other documents suggested US-dollar trades with Iranian counterparties - including documentation indicating dollar transactions were made for a sanctioned counterparty,” the DFS said.

The bank also ignored warnings from the agency to improve its internal compliance measures as the volume of international transactions increased beginning in 2013, the DFS said.

Published in The Express Tribune, November 6^th, 2016.

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