$55m penalty imposed on local bank

Fine slapped due to violation of AML laws, failure to operate New York branch

KARACHI:

The US authorities have imposed a fine of $55 million on a local bank for alleged violation of anti-money laundering (AML) laws and repeated failure to operate its New York branch in compliance of the US laws.

The US imposed the fine on the National Bank of Pakistan (NBP) on the day Prime Minister Imran Khan paid a scheduled visit to Russia that remains an old rival of Washington.

"The Federal Reserve Board on Thursday announced a $20.4 million penalty against the National Bank of Pakistan, a foreign bank operating in the United States and headquartered in Pakistan, for anti-money laundering violations,” said a statement issued by the Federal Reserve.
“The board will also require the firm to improve its anti-money laundering program."

As detailed in the consent cease and desist order against the bank, the firm's US banking operations did not maintain an effective risk management program or controls sufficient to comply with anti-money laundering laws, it said.

The board's action is in conjunction with an action by the New York State Department of Financial Services which "announces $35 million penalty for repeated compliance failures," said a statement issued by Superintendent of Financial Services Adrienne A Harris.

The bank’s New York branch has agreed to pay $35 million in penalties pursuant to a consent order entered into with the New York State Department of Financial Services.

"The Consent Order resolves the Department's investigation into compliance deficiencies at the branch with respect to Bank Secrecy Act/Anti-Money Laundering (BSA/AML) requirements."

The bank allowed serious compliance deficiencies in its New York branch to persist for years despite repeated regulatory warnings," said Superintendent Harris.

Following examinations conducted by the Department and the Federal Reserve in 2014 and 2015, the New York branch was found to have inadequate BSA/AML compliance programs, serious issues with its transaction monitoring systems, and significant shortcomings in managerial oversight, it said.

The DFS acknowledged the bank’s cooperation with the investigation and its ongoing remedial efforts. 

The department coordinated this investigation with the FRBNY which has reached a separate settlement with the bank.