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In statement, NYDFS says bank will also have to provide a written plan detailing how it would improve its compliance regime and ensure due diligence of all customers
Authorities in the United States on Thursday imposed over $55 million in fines on the National Bank of Pakistan (NBP) and its New York branch for “repeated” compliance failures as well as anti-money laundering violations.
In a statement, the Federal Reserve Board said it was imposing $20.4 million in penalties against the bank for anti-money laundering violations, adding that going forward the bank would need to improve its anti-money laundering regime.
According to the Fed, the NBP’s banking operations in the U.S. “did not maintain an effective risk management program or controls sufficient to comply with anti-money laundering laws.” It noted that its action was in conjunction with the New York State Department of Financial Services (NYDFS), which imposed a separate penalty of $35 million on the bank for “repeated” compliance failures.
Announcing the order, NYDFS Superintendent Adrienne A. Harris said that NBP and its NY branch had agreed to pay the penalty. “The NBP allowed serious compliance deficiencies in its NY branch to persist for years despite repeated regulatory warnings,” she was quoted as saying in a press release. It said that the NBP’s NY branch had been found to have “inadequate Bank Secrecy Act/Anti-Money Laundering compliance programs, serious issues with its transaction monitoring system, and significant shortcomings in managerial oversight” in a probe jointly conducted by the NYDFS and the Federal Reserve Bank of NY in 2014 and 2015.
Despite enforcement action against the bank in 2016 in the form of a written agreement under which the NBP had acknowledged the oversight and compliance deficiencies and agreed to remediate them, read the statement, the branch’s condition and risk management and compliance programs continued to deteriorate.
“These continued failures revealed that the branch’s senior management were unwilling or unable to promote a culture of compliance, adequate resources were not provided for compliance programs, and the bank failed to adequately supervise the branch by allowing problems to worsen year after year. The conditions at the branch demonstrated severe weaknesses, and unsafe, unsound conditions requiring urgent restructuring,” it stressed, adding that in addition to the penalties, the bank would have to provide a written plan detailing how it would improve its compliance regime and ensure due diligence of all customers.
“Additionally, at the department’s discretion, the bank may be required to engage an independent consultant to conduct a comprehensive evaluation of the bank and the branch’s remediation efforts—an evaluation that could lead to the imposition of a full monitor-ship,” the statement warned, while noting that the bank had fully cooperated with the investigation and ongoing remedial efforts.