Capitalizing on its new AML regulations and perhaps attempting to seize the mantle of leading AML enforcement, the NYDFS announced several high-dollar value enforcement actions in 2016, all against foreign banks. For instance, on December 15, 2016, the NYDFS filed a consent order requiring Intesa Sanpaolo, S.p.A. to pay a $235 million civil monetary fine and extend the term of engagement with a NYDFS-appointed consultant for violations of the New York AML regulations.
The consent order addressed the bank’s alleged compliance failures spanning several years and arising from deficiencies in the implementation and oversight of its transaction monitoring system. These alleged compliance failures were discovered by a NYDFS-appointed consultant who was installed at the bank due to ongoing issues with the bank’s AML compliance program.
The order enumerated several alleged AML and BSA violations including:
A deficient transaction monitoring system at the bank’s New York branch including:
- Failing to maintain an effective and compliant AML program and OFAC compliance program, such as unauthorized clearing practices that were being cleared outside of the bank’s prescribed written procedures;
- Failing to maintain and make available true and accurate books, accounts, and records reflecting all transactions and actions, such as failing to track thousands of alerts generated by the bank’s automated system that may have identified suspicious transactions; and
- Failing to submit a report to the Superintendent upon discovering omissions of true entries.
Shell company activity indicative of potentially suspicious transactions such as clearing thousands of transactions through the New York branch totaling hundreds of millions of dollars that bore indicia of potentially suspicious activity in relation to shell companies; and
Non-transparent payment processing, such as:
- Training employees to handle transactions involving Iran to conceal money-processing activities so they could not be readily flagged as transactions tied to a sanctioned entity;
- Using non-transparent protocol to conduct more than 2,700 U.S. dollar clearing transactions worth more than $11 billion on behalf of Iranian clients and other entities possibly subject to U.S. economic sanctions; and
- Failing to fully comply with a 2007 agreement, which required the bank to implement and maintain an effective AML compliance program.
In addition to the $235 million penalty, the consent order compels the bank to extend the engagement of its independent consultant for up to two years to further analyze and test the bank’s efforts to remediate its violations. Within 60 days of the consultant’s report, the bank must submit a revised AML and BSA compliance program and internal audit program; a plan to enhance oversight of the bank’s compliance program by bank management; an enhanced customer due diligence program; and a program ensuring identification and timely reporting of all known or suspected violations of law or suspicious transactions to authorities.
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