UAE-based Mashreqbank has agreed to pay $40m to the New York State Department of Financial Services (DFS). This is to resolve charges of breaching anti-money laundering laws.
The DFS said the bank was penalised for violating the US Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) laws during clearing operations at its New York branch.
DFS identified these breaches while examining the bank’s activities along with the Federal Reserve Bank of New York (FRBNY).
In addition to the penalty, Mashreqbank is required to hire a third-party compliance consultant to address the deficiencies.
It is also required to deploy a ‘lookback consultant’ to carry out a comprehensive review of the New York branch’s transaction clearing activity between April 2016 and September 2016.
Financial Services superintendent Maria Vullo said: “Mashreqbank failed to fully comply with critical New York and federal banking laws aimed at combating international money laundering, terrorist financing and other related threats by failing to provide adequate oversight of transactions by customers in high-risk regions.
“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.”
During investigations, Mashreqbank’s New York branch was found to be engaged in a significant amount of US currency clearing activity for foreign customers in high risk jurisdictions.
In 2016, the branch cleared more than 1.2 million US Dollar transactions with a combined value of around $367bn. Last year, it cleared around one million US Dollar transactions valued at more than $350bn.
However, the settlement did not reveal any willful violation.