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Financial Services Law Insights and Observations

Federal Reserve issues BSA/AML enforcement action against Japanese bank

Federal Issues Federal Reserve Enforcement Bank Secrecy Act Of Interest to Non-US Persons

Federal Issues

On April 25, the Federal Reserve Board announced an enforcement action against a Japanese bank for alleged weaknesses in its New York branch’s anti-money laundering risk management and compliance programs, including a failure to comply with applicable rules and regulations, including the Bank Secrecy Act. Under the terms of the order, the bank is required to, among other things, (i) develop and implement a written plan to strengthen the board of directors’ oversight of Bank Secrecy Act/anti-money laundering (BSA/AML) compliance and Office of Foreign Assets Control (OFAC) regulations; (ii) submit an enhanced written compliance program that complies with BSA/AML requirements; (iii) submit an enhanced, written customer due diligence plan; (iv) submit a written program to ensure compliant, timely, and accurate suspicious activity monitoring and reporting; (v) submit a written plan to enhance OFAC regulation compliance; and (vi) submit a written plan for independent testing of the bank’s compliance with all applicable BSA/AML requirements. A civil money penalty was not assessed against the bank or the branch. This is the latest in a long string of BSA/AML and OFAC-related regulatory enforcement actions against the U.S. operations of foreign banking organizations. Intense regulatory scrutiny of such institutions’ BSA/AML and OFAC risk management appears to continue unabated.

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