International bank fined $20.4 million for BSA/AML deficiencies

In a Cease and Desist Order, the Federal Reserve Board (“FRB”) determined that the National Bank of Pakistan, through its New York Branch (“Branch”), should take positive measures to correct deficiencies in the fight against money laundering. The FRB said the branch did not maintain an effective risk management program or sufficient controls to comply with the Bank Secrecy Act (“BSA”) and anti-money laundering laws, rules and regulations silver.

The FRB Order requires the Bank and the Branch to jointly undertake to:

  • submit a written plan to improve oversight by Bank and branch management;

  • submit a written revised BSA/AML compliance program for the branch;

  • submit a revised written customer due diligence program;

  • submit a written program reasonably designed to ensure the Branch’s prompt, accurate and complete identification and reporting of all known or suspected violations of law or suspicious transactions to law enforcement and supervisory authorities , as required by applicable laws and regulations regarding the reporting of suspicious activity;

  • engage an independent third party approved by the Reserve Bank to (i) validate the effectiveness of the branch’s transaction tracking system and (ii) prepare a written report of findings, conclusions and recommendations; and

  • designate an agent to coordinate and submit to the FRB the requirements listed above.

The FRB also imposed a fine of $20.4 million. The FRB order follows a related New York State Department of Financial Services (“NYDFS”) consent order with the bank and branch. Under the NYDFS consent order, the bank and branch must pay a $35 million fine to resolve allegations of similar violations under New York law.

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