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Financial Services Law Insights and Observations

NYDFS orders United Arab Emirates-based bank to pay $40 million for BSA/AML violations

Financial Crimes NYDFS Bank Secrecy Act Anti-Money Laundering OFAC

Financial Crimes

On October 10, NYDFS entered into a consent order with a United Arab Emirates-based bank and its New York branch to resolve alleged violations of the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) laws related to the branch’s U.S. dollar clearing operations for foreign customers located in high risk jurisdictions. The alleged violations were discovered during examinations conducted in 2016 by the NYDFS and 2017 by the NYDFS and Federal Reserve Bank of New York. During this time, NYDFS downgraded the bank’s score due to certain alleged deficiencies identified in the branch’s BSA/AML programs and policies designed to ensure compliance with OFAC regulations. According to the consent order, among other things, the branch (i) failed to maintain adequate transaction monitoring and had deficient recordkeeping practices; (iii) “maintained insufficient documentation concerning its dispositions of OFAC alerts and cases”; (iv) failed to substantiate its rationales for waiving specific alerts and cases; and (v) failed to sufficiently oversee the third-party auditor who conducted the branch’s 2017 BSA/AML audit and remedial work evaluation.

The United Arab Emirates-based bank and its New York branch are required to pay a $40 million civil money penalty, and must also engage an independent third party to assist the branch in addressing its BSA/AML compliance deficiencies and develop (i) a BSA/AML compliance program; (ii) a suspicious activity monitoring and reporting program; (iii) a customer due-diligence program; and (iv) a plan to enhance oversight of the branch’s BSA/AML corporate governance and management oversight.

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