The Federal Reserve in US on Thursday ordered United Bank Limited to toughen its anti-money laundering policies and faulted the Pakistani bank for not doing enough to track suspicious transactions.
The Thursday order is at least the second time that the Fed has sanctioned the Pakistan-based bank in recent years.
In 2013, the Federal Reserve ordered United Bank to closely monitor remittances from New York City to Karachi and faulted the bank’s anti-money laundering oversight.
UBL first disclosed the agreement in its annual report in December 2017. “UBL and its New York branch entered into a written agreement in 2013 with the Federal Reserve Bank New York (FRBNY) to address certain compliance and risk management matters relating primarily to compliance with Anti-Money Laundering Regulations including the Banking Secrecy Act,” it said in a note on p.38 of the report.
UBL shares took a strong battering after the disclosures, fueled by serious money laundering rumors and heavy fines such as those observed in Habib Bank’s case.
In a notification sent to the Pakistan Stock Exchange (PSX) on Friday United Bank Limited (UBL) said
“United Bank Limited (UBL) and its New York branch have entered into a Written Agreement (WA 2018) with the Federal Reserve Bank of New York (FRBNY), effective July 2, 2018, upon termination of the earlier Written Agreement entered into on 28 October 2013 (WA 2013), which was primarily related to the New York branch’s international remittance services.”
It also said that the new WA 2018 requires UBL to take steps to strengthen its Bank Secrecy Act and Anti Money Laundering Compliance, Customer Due Diligence and Suspicious Activity Monitoring and Reporting Programmes.
The Federal Reserve Bank of New York said that the most recent examination of the UBL’s New York branch identified deficiencies relating to UBL’s NYC branch risk management and compliance with applicable federal and state laws, rules, and regulations relating to anti-money laundering (AML) compliance.
The board of directors of the Bank, at a duly constituted meeting, adopted a resolution authorizing and directing Ms. Sima Kamil and Mr. Azeem ur Rahim to enter into this Written Agreement (the “Agreement”) on behalf of the Bank and the Branch, respectively, and consenting to compliance with each and every provision of this Agreement by the Bank and the Branch.
Within 60 days of the submission of the Compliance Report, the Bank and the Branch shall jointly 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 acceptable to the Reserve Bank.
To ensure anti-money laundering compliance, UBL’s NYC branch within thirty days of this agreement be required to shall retain an independent third party acceptable to the Reserve Bank to conduct a comprehensive review of its compliance with the BSA/AML Requirements (the “Compliance Review”), and prepare a written report of findings, conclusions, and recommendations (the “Compliance Report”).
Within 10 days of this Agreement, the Bank and the Branch shall designate an officer as liaison for the term of this Agreement to be responsible for coordinating and submitting to the Reserve Bank the written plan, programs, policies, procedures, and engagement letters required under the terms of this Agreement.