US: Stop $ laun­der­ing

China Daily (Canada) - - FRONT PAGE - By AGEN­CIES

China Con­struc­tion Bank has been or­dered to tighten money-laun­der­ing con­trols at its New York branch to re­solve an en­force­ment ac­tion brought by the US Fed­eral Re­serve and the New York Depart­ment of Fi­nan­cial Ser­vices.

The world’s sec­ond-largest bank by as­sets is work­ing to ad­dress “de­fi­cien­cies re­lat­ing to the branch’s risk man­age­ment and com­pli­ance” with the Bank Se­crecy Act, the reg­u­la­tors said on Tues­day. The or­der calls for bet­ter over­sight of ac­count hold­ers and the cre­ation of a new in­ter­nal au­dit pro­gram.

The bank should sub­mit plans for com­pli­ance and cus­tomer due dili­gence pro­grams to help curb money laun­der­ing and sus­pi­cious trans­ac­tions within 60 days, the Fed said.

Mil­dred Harper, chief com­pli­ance of­fi­cer at CCB’s New York branch, con­firmed the en­force­ment ac­tion but de­clined to com­ment.

It is the first time that the Fed has taken an en­force­ment ac­tion against CCB, ac­cord­ing to a Fed data­base. The records show that no sim­i­lar ac­tions have been taken against any of the three other large Chi­nese banks — Bank of China, In­dus­trial and Com­mer­cial Bank of China and Agri­cul­tural Bank of China.

The Fed did not im­pose a fine or other im­me­di­ate sanc­tions on the bank, and it did not de­tail what spe­cific prob­lems CCB was fac­ing.

But a source fa­mil­iar with the mat­ter said the Fed ac­tion was driven by is­sues in the cor­re­spon­dent bank­ing busi­ness, in which banks trans­act in dol­lars on be­half of for­eign banks that have no pres­ence in the United States.

There have been prob­lems with how CCB mon­i­tored trans­ac­tions, said the source, who asked not to be named.

The is­sue of banks fail­ing to prop­erly vet for­eign cor­re­spon­dents is a ma­jor con­cern for reg­u­la­tors in the US. Some banks are act­ing as a gate­way to the US fi­nan­cial sys­tem with­out do­ing enough to keep crim­i­nals out, reg­u­la­tors say.

Some high-pro­file banks have been hit with huge fines in re­cent years for fail­ing to ad­here to US guide­lines.

Last year, BNP Paribas pleaded guilty to two crim­i­nal charges and agreed to pay al­most $9 bil­lion to re­solve ac­cu­sa­tions that it vi­o­lated US sanc­tions against coun­tries such as Su­dan, Cuba and Iran.

In 2012, HSBC Hold­ings paid a $1.9 bil­lion fine to the US author­i­ties, a record at the time, for al­low­ing it­self to be used to laun­der drug money from Mexico’s Si­naloa car­tel and Colom­bia’s Norte del Valle car­tel.

CCB has branches in 24 coun­tries and of­fers cor­po­rate bank­ing ser­vices to Chi­nese and lo­cal com­pa­nies. Its New York of­fice is reg­u­lated by the state and the Fed­eral Re­serve Bank of New York.

No re­sponse was re­ceived from the bank’s Bei­jing head­quar­ters by press time.

Reuters — Bloomberg

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