National Bank of Pakistan pays $55.4M for AML violations

The Federal Reserve Board has issued a consent order to cease and desist and assessment of a $20.4 million civil money penalty to National Bank of Pakistan (Karachi) and National Bank of Pakistan New York Branch (New York City).

The order states that the most recent examination of the Branch conducted by the Federal Reserve Bank of New York (the “Reserve Bank”) and the New York State Department of Financial Services (“NYSDFS”) as of March 4, 2021, disclosed significant deficiencies in the Branch’s risk management and compliance with federal 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 thereunder by the U.S. Department of the Treasury (31 C.F.R. Chapter X); and the requirements of Regulation K of the Board of Governors to report suspicious activity and to maintain an adequate BSA/AML compliance program (12 C.F.R. §§ 211.24(f) and 211.24(j)) (collectively, the “BSA/AML Requirements”).

On March 14. 2016, the Bank and the Branch entered into a Written Agreement with the Reserve Bank and NYSDFS designed to correct certain deficiencies in the Branch’s compliance with the BSA/AML Requirements. As of the most recent examination, the Bank and the Branch had not achieved full compliance with each and every provision of the Written Agreement. In response to the Reserve Bank’s 2019 examination of the Branch, the Bank has instituted new management at the Branch who are continuing to improve the Branch’s corporate governance, management oversight, and compliance with the BSA/AML Requirements, in order to comply with safe and sound banking practices and applicable federal laws, rules, and regulations.

In addition to the money penalty, the order requires the bank to take several prescribed actions to enhance its AML program.

The NYSDFS announced a separate settlement with the bank. Under the terms of the settlement with the state agency, the bank will pay the NYSDFS $35 million and will be required to create a written plan, acceptable to the Department, detailing enhancements to the policies and procedures of the Bank’s BSA/AML compliance program, its Suspicious Activity Monitoring and Reporting program, and its customer due diligence requirements. Additionally, at the Department’s discretion, the Bank may be required to engage an independent consultant to conduct a comprehensive evaluation of the Bank and the Branch’s remediation efforts — an evaluation that could lead to the imposition of a full monitorship.