UBL directed to strengthen anti money laundering compliance

Federal Reserve Bank of New York and UBL enter into new Written Agreement

KARACHI: United Bank Limited (UBL) has been directed to strengthen its Bank Secrecy Act and Anti Money Laundering Compliance along with a host of other measures after entering into a new Written Agreement (WA 2018)) with the Federal Reserve Bank of New York (FRBNY) effective July 2, 2018.

The new agreement follows the termination of the Written Agreement earlier signed on October 28, 2013, which was primarily related to the New York branch's international remittance services.

In a notice sent to the Pakistan Stock Exchange (PSX), UBL said that though no civil penalty was imposed, the WA 2018 "requires the bank to take steps to strengthen its Bank Secrecy Act and Anti Money Laundering Compliance, Customer Due Diligence and Suspicious Activity Monitoring and Reporting programmes".



"As stated in the WA 2018, it is the common goal of the FRBNY, UBL and the New York branch that the New York branch operates in compliance with all applicable federal and state laws, rules and regulations," read the notice sent to the PSX.



Just to recall, pursuant to the implementation of the 2013 agreement, the bank closed down its remittance business, said BMA Capital Management's Economist Muhammad Fawad Khan in a note to clients.

Under the new agreement, the bank has been asked to hire a third party within 10 days of the agreement and submit a compliance report within 60 days of approval of engagement of the letter of the third party by the reserve bank.

Three to four different reports are required after submission of the compliance report relating to Bank Secrecy Act, AML, Customer Due Diligence, and Suspicious Activity Monitoring and Reporting, he said.

Samiullah Tariq, head of research at Arif Habib Limited, said the Federal Reserve Bank of New York examined the UBL New York branch operations and highlighted deficiencies in compliance with the regulations.



The announcement comes at a time when rumours in the market indicated a similar fate for UBL as with Habib Bank Limited that faced a $225-million penalty and had to shut down its branch in New York last year.

However, UBL's share price hit the upper price limit, ending at Rs160.19 with 3.18 million shares changing hands as investors dived in amid expectations of a rate hike by the central bank in its monetary policy announcement on Saturday.

Published in The Express Tribune, July 14^th, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.