International Bank Fined $20.4 Million for BSA/AML Deficiencies

In an Order to Cease and Desist, the Federal Reserve Board ("FRB") determined that the National Bank of Pakistan, through its New York branch ("Branch"), must take affirmative action to correct AML deficiencies. The FRB stated that the Branch office did not maintain an effective risk management program or controls sufficient to comply with Bank Secrecy Act ("BSA") and AML laws, rules and regulations.

The FRB Order requires the Bank and the Branch to jointly:

• submit a written plan to enhance oversight by the management of the Bank and the Branch;

• submit a written revised BSA/AML compliance program for the Branch;

• submit a written revised customer due diligence program;

• submit a written program reasonably designed to ensure the identification and timely, accurate and complete reporting by the Branch of all known or suspected violations of law or suspicious transactions to law enforcement and supervisory authorities, as required by applicable suspicious activity reporting laws and regulations;

• engage an independent third party that is approved by the Reserve Bank to (i) validate the effectiveness of the Branch's transaction monitoring system and (ii) prepare a written report of findings, conclusions and recommendations; and

• designate an officer responsible for coordinating and submitting to the FRB the requirements listed above.

The FRB also levied a $20.4 million penalty. The FRB Order follows a related New York State Department of Financial Services ("NYDFS") Consent Order with the Bank and Branch. Under the NYDFS Consent Order, the Bank and Branch must pay a $35 million penalty to resolve allegations of similar violations under New York law.