The US Federal Reserve Board on Thursday announced a $20.4 million penalty against the National Bank of Pakistan (NBP) for violation of anti money laundering rules, and another $35 million was fined by the New York State Department of Financial Services for compliance failures.
In a statement, Superintendent Adrienne A Harris of the New York State Department of Financial Services (DFS) said that they had imposed the $35 million penalty on the bank for ‘repeated compliance failure’. According to the Federal Reserve Board, its action was “in conjunction with a similar action by the New York State Department of Financial Services”.
According to a press release issued by the board, it would also require the bank to improve its anti-money laundering programme as NBP’s US operations “did not maintain an effective risk management programme or controls sufficient to comply with anti-money laundering laws”.
In addition to payment of penalties, the NBP will be required to “create a written plan, acceptable to DFS, 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”.
The decision was based on a probe conducted in 2014 and 2015. Pakistan’s National Bank operates in the United States as a foreign bank, with a branch in Washington DC which usually deals with official transactions, particularly those of Pakistan’s Embassy in the United States.
The bank’s Washington office said it had stopped most public dealings in September 2011 .
NBP President Arif Usmani said the penalty was for “historical compliance programme weaknesses and delays in making compliance-related enhancements.” He claimed that the bank’s system had improved under a new management.
“U.S. regulators have recognised the positive changes resulting from new management. The National Bank of Pakistan and the New York branch are fully committed to satisfying the regulators’ expectations,” said the statement.
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