Deficiencies in Bank Secrecy Act, AML compliance: FRBNY terminates United Bank ‘WA-2018’on liquidation completion of NY Branch
Earlier, HBL has to wind up New York branch and make payment of $225 for AML violation
M Jahangir Hayat
LAHORE: The Federal Reserve Bank of New York (“FRBNY”) has informed that the Written Agreement dated 02 July 2018 (WA-2018), signed by and among the FRBNY, UBL and NY Branch has been terminated.
The termination of WA-20 18 marks the completion of UBL NY Branch winding down process in an orderly manner under the guidance of both the Regulators i.e. NYDFS and FRBNY.
“UBL deeply appreciates the assistance provided by the State Bank of Pakistan, the New York Department of Financial Services, and the Federal Reserve Bank of New York during the voluntary liquidation process and during the time that the NY Branch was in business,” UBL management said.
“Further to the disclosure made on 29 January, 2019 regarding the voluntary liquidation by United Bank Limited (“UBL” or the “Bank”) of its New York Branch (the “NY Branch”), and surrendering of the NY Branch’s license to the New York State Department of Financial Services (the “NYDFS”), in accordance with Section 605.II(c) of the New York Banking Law and the procedures prescribed by the NYDFS, we write to inform that consequent upon the liquidation of “NY Branch”, in an orderly manner, the Federal Reserve Bank of New York (“FRBNY”) has informed that the Written Agreement dated 02 July 2018 (WA-2018), signed by and among the FRBNY, UBL and NY Branch has been terminated. This disclosure was made public by Federal Reserve Board on 23 May 2019 after the office hours in Pakistan. The termination of WA-20 18 marks the completion of UBL NY Branch winding down process in an orderly manner under the guidance of both the Regulators i.e. NYDFS and FRBNY,” the bank informed.
The United Bank Limited (UBL) was directed to strengthen its Bank Secrecy Act and Anti Money Laundering Compliance along with a host of other measures after entering into a new Written Agreement (WA 2018)) with the Federal Reserve Bank of New York (FRBNY) effective July 2, 2018.
The “Written Agreement” dated 02 July 2018 (WA-2018) in which the FRBNY identified various deficiencies on the part of the UBL New York Branch identified that United Bank Limited, Karachi, Pakistan (the “Bank”) is a foreign bank as defined in section 1(b)(7) of the International Banking Act (12 U.S.C. § 3101(7)).
The Bank conducts operations in the United States through a branch in New York, New York (the “Branch”) for which the Board of Governors of the Federal Reserve System (the “Board of Governors”) is the appropriate federal supervisor, it was said.
The agreement pointed out the most recent examination of the Branch conducted by the Federal Reserve Bank of New York identified deficiencies relating to the Branch’s risk management and compliance with applicable federal and state laws, rules, and regulations relating to anti-money laundering (“AML”) compliance, including the Bank Secrecy Act (“BSA”) (31 U.S.C. § 5311 et seq.); the rules and regulations issued there under by the U.S. Department of the Treasury (31 C.F.R. Chapter X); and the requirements of Regulation K of 2 the Board of Governors to report suspicious activity and maintain an adequate BSA/AML compliance program (12 C.F.R. §§ 211.24(f) and 211.24(j)) (collectively, the “BSA/AML Requirements”).
The “Written Agreement,” is the common goal of the Reserve Bank, the Bank, and the Branch that the Branch operates in compliance with all applicable federal and state laws, rules, and regulations; and WHEREAS, on June 28, 2018, the board of directors of the Bank, at a duly constituted meeting, adopted a resolution authorizing and directing Ms. Sima Kamil and Mr. Azeem ur Rahim to enter into this Written Agreement (the “Agreement”) on behalf of the Bank and the Branch, respectively, and consenting to compliance with each and every provision of this Agreement by the Bank and the Branch, it was said.
Earlier, Habib Bank Limited (HBL) has also to wind up its New York branch and made payment of $225 million in penalty for US allegations that it was not complying with the anti-money laundering laws.