New York’s state bank regulator fined the giant Agricultural Bank of China USD 215 million on Saturday for citing a deliberate failure to scrutinize dubious money transfers.
The bank has violated anti-money laundering laws and obscuring suspicious transactions involving Russia, China, Afghanistan and other countries.
Citing a deliberate failure to scrutinize dubious money transfers, the Department of Financial Services said the bank, the third-largest in the world, created “a substantial risk” that terrorist groups, sanctions-barred countries and criminals could have passed funds through the bank.
The bank had also “silenced” a whistleblower who attempted to carry out internal investigations, according to the DFS.
The move by the powerful New York regulator followed a September action by the Federal Reserve, which ordered AgBank to improve internal controls against money laundering.
Natasha Taft, a former staffer, settled a lawsuit against the bank that month after claiming she had been forced out of her job after reporting potential violations to the Fed.
DFS also said today that bank staff had taken deliberate steps to hide US dollar transactions passing through its New York branch that could have been tied to violations of trade sanctions and anti-money laundering laws.
Bank examiners found the bank had used “evasive” transaction methods, including masking the true identity of parties to transactions using SWIFT, the global network which enables financial transfers.
According to the DFS, examiners identified unusually large round-dollar transactions between Chinese companies and counterparties in Russia and Yemen, dollar payments between a customer of Turkish Bank and a client at Afghan Bank whom the US Treasury had linked to financial network used to fund drug trafficking.
“Certain invoices involving China and Russia appeared to be counterfeit or falsified, while other documents suggested US-dollar trades with Iranian counterparties—including documentation indicating dollar transactions were made for a sanctioned counterparty,” the DFS said.
The bank also deliberately ignored warnings from the agency to improve its internal compliance measures as the volume of international transactions increased beginning in 2013, the DFS said.
“DFS will take swift and appropriate action when our investigation finds egregious conduct and intentional circumvention of a regulated bank’s compliance program,” Financial Services Superintendent Maria Vullo said in a statement.
In addition to paying the penalty, the bank agreed to take immediate steps to improve its legal compliance, including hiring an outside monitor.