US Authorities Fine NBP $55M over AML Breaches, Compliance Failures

The National Bank of Pakistan (NBP) recently has been fined more than $55 million by United States authorities for anti-money laundering violations and for repeated compliance failures.

The Federal Reserve Board announced a $20.4m penalty against the bank for anti-money laundering violations. According to a press release issued by the Fed, it would also require the bank to improve its anti-money laundering programme.

The Fed went on to say that NBP's US banking operations "did not maintain an effective risk management programme or controls sufficient to comply with anti-money laundering laws".

It added that the action was in conjunction with an action by the New York State Department of Financial Services (NYDFS), which imposed a penalty of $35m for "repeated compliance failures".

NYDFS Superintendent Adrienne A. Harris announced 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," a press released quoted Harris as saying.

It added that after investigations by the NYDFS and the Federal Reserve Bank of NY in 2014 and 2015, the NY branch was found to have "inadequate Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance programmes, serious issues with its transaction monitoring system, and significant shortcomings in managerial oversight".

Enforcement action was taken against the bank in 2016 in the form of a written agreement in which the NBP acknowledged the oversight and compliance deficiencies and agreed to remediate them, the statement said.

However, the branch's condition and its risk management and compliance programmes continued to deteriorate.

Under the settlement reached, the NBP would be required to create a written plan detailing enhancements to the policies and procedures of the bank's BSA/AML compliance programme, its Suspicious Activity Monitoring and Reporting programme and its customer due diligence requirements.

"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 monitorship," the statement said.

At the same time, the NYDFS also acknowledged the bank's cooperation with the investigation and ongoing remedial efforts.

(Source: Dawn)