On October 17, the Federal Reserve Board released a cease and desist order against a foreign bank and its New York branch over alleged BSA/AML compliance failures. After entering into a Written Agreement in June 2012 that required the branch to improve compliance with BSA/AML in connection with the branch’s bulk cash transactions business line, the Federal Reserve Bank of New York conducted an examination to assess the effectiveness of the branch’s BSA/AML compliance program in other business lines. This examination identified an alleged failure of the branch to maintain an adequate risk-based compliance program to mitigate the BSA/AML risks associated with the branch’s foreign correspondent accounts. The order requires the bank and the branch to (i) retain an independent consultant to assess, and prepare a compliance report on, the branch’s compliance with the BSA/AML requirements, (ii) submit an enhanced BSA/AML compliance program, (iii) submit an enhanced customer due diligence program and an enhanced suspicious activity reporting program, and (iv) retain an independent consultant to conduct a suspicious activity review of U.S. dollar transactions cleared over a six month period in 2012. In addition, the bank’s board and the branch management must jointly submit a written management oversight plan.
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