The National Bank of Pakistan (NBP) and its New York branch will pay a penalty of $35 million to the New York State Department of Financial Services (DFS) for Bank Secrecy Act (BSA)/AML compliance deficiencies.
DFS inspections in 2014-15 revealed that NBP’s New York branch had deficiencies in its BSA/AML compliance programs, transaction monitoring system, and managerial oversight. Subsequently, in 2016, the DFS and the Federal Reserve Bank of New York (FRBNY) took enforcement action against NBP. At this time, NBP acknowledged its compliance and oversight deficiencies, agreeing to remediate them. However, the quality of the risk management and compliance programs at NBP’s New York branch worsened, revealing an unwillingness and inadequacy on the part of the senior management. Moreover, the branch did not receive sufficient resources and guidance related to compliance programs.
As such, in addition to the $35 million penalty, NBP must develop a written plan outlining the Bank’s BSA/AML compliance program, Suspicious Activity Monitoring and Reporting system, and customer due diligence requirements. The DFS may also ask NBP to hire a third-party consultant to assess the institution’s remediation efforts.
Source: Department of Financial Services, State of New York, USA