Mashreq to pay New York regulator $40m in settlement
Mashreq Bank, the Dubai lender controlled by the Al Ghurair family, has agreed to pay the New York State Department of Financial Services $40 million (Dh146.9m) as part of a settlement regarding “gaps” in compliance.
“The agreement addresses findings related to the New York Branch’s Bank Secrecy Act/Anti-Money Laundering programme and gaps in execution of its Office of Foreign Assets Control sanctions compliance programme, identified during regulatory examinations in 2016 and 2017,” the bank said in a statement to the Dubai Financial Market, where its shares are traded.
The consent order did not specify any wilful violation, the bank and the regulator said.
Mashreq did not provide further details about the nature of the gaps and it could not be reached for comment.
“Mashreq Bank failed to fully comply with critical New York and federal banking laws aimed at combating international money laundering … and other related threats by failing to provide adequate oversight of transactions by customers in high-risk regions,” financial services superintendent Maria Vullo said in a statement on the DFS website.
The regulator said the bank will need to hire a third party to launch a review of the New York branch’s transaction activity between April and September 2016, “along with remedial actions”.
The DFS and the Federal Reserve Bank of New York had conducted examinations of the bank’s transactions.
“The branch engaged in a substantial amount of US dollar clearing activity for foreign customers in high risk jurisdictions,” the DFS statement said. “At the time of the 2016 examination, the branch’s Bank Secrecy Act and Anti-Money Laundering and Office of Foreign Assets Control policies lacked detail, nuance or complexity, doing little more than citing standard language from applicable regulations.”
Mashreq said it has strengthened its secrecy and anti-money laundering and sanctions compliance infrastructure at its New York branch, which has been operating for 30 years.
“The New York Branch continues to remain important to Mashreq’s role as a leading provider of Correspondent Banking and Trade Finance services,” the lender added.