New York: UAE bank Mashreqbank fined $40 million over poor anti-money laundering controls
12 Oct 2018

The New York Department of Financial Services has fined United Arab Emirates-based Mashreqbank PSC and its New York branch $40 million after it found the bank had poor record keeping and failed to adequately monitor transactions in accordance with US anti-money laundering rules.

The bank’s New York branch offers correspondent banking and trade finance services and provides U.S. dollar clearing services to clients located in Southeast Asia, the Middle East and Northern Africa – regions that present a high risk in connection with financial transactions.

The branch engaged in a substantial amount of U.S. dollar clearing activity for foreign customers in high risk jurisdictions. For example, in 2017, it cleared well over 1 million U.S. Dollar transactions with an aggregate value exceeding $350 billion.

When the DFS conducted a safety and soundness examination of its operations in 2016, it found that the branch’s BSA/AML and OFAC policies lacked detail, nuance or complexity, ‘doing little more than citing standard language from applicable regulations.’

In 2017, examiners found that records regarding specific alerts and dispositions continued to lack detailed information, making it difficult for examiners to assess the adequacy of investigations conducted by compliance staff.

Rationales for closing alerts also failed to include essential information.

The branch’s OFAC program also suffered from certain deficiencies in important aspects of its recordkeeping, DFS said.

It added that the branch maintained inadequate documentation concerning its dispositions of OFAC alerts and cases, with branch compliance staff failing to properly substantiate its rationales for waiving specific alerts and cases.

Financial Services Superintendent Maria T. Vullo said: “DFS appreciates Mashreqbank’s strong cooperation in resolving this matter. By this consent order, the bank is being held accountable for ensuring vigilance against money laundering and other illicit activity to ensure that our financial system remains safe and sound.”

You can claim CPD minutes for reading this article, by signing up to our CPD Wallet

Must Read

Bearing witness to financial crime, across party lines

If it seems like an odd recipe for financial oversight, it’s also a surprisingly effective one: take five to ten congressional staffers, exile them to a squalid basement office with “hard-boiled” charm in the U.S. Senate’s oldest building, give them access to subpoena powers and a seemingly endless series of… Read More

Anti-money laundering analysis: UK FCA and EU blacklists update

A key element in the application of the risk-based approach (RBA) to financial crime is the identification by a firm of those countries with which its customers are closely linked and which are also adjudged to be high risk in financial crime terms. There are many lists of such high-risk… Read More