On April 23, 2019, the Federal Reserve Bank of New York (FRB-NY), entered into a consent agreement with Sumitomo Mitsui Banking Corporation (the Bank) and the Bank’s New York Branch (the Branch) for significant deficiencies in the Branch’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program. Sumitomo is a foreign bank based in Tokyo and operates a branch in New York, which is regulated by the FRB-NY. The Branch’s most recent examination by the FRB-NY identified numerous deficiencies, across all areas, in its BSA/AML compliance program.
According to the Agreement, the Branch must make several improvements to its program in order to achieve BSA/AML compliance and avoid further enforcement and/or monetary penalties. Within 60 days, the Bank and Branch must:
- Submit a written plan to enhance oversight of the Branch’s compliance with the BSA/AML requirements;
- Submit a written enhanced BSA/AML compliance program for the Branch that is acceptable to the FRB-NY and includes the five pillars of such a program;
- Submit a written revised customer due diligence program;
- Submit a written program designed to ensure the identification and timely, accurate, and complete reporting of all known or suspected violations of law or suspicious transactions;
- Submit a written plan to enhance the Branch’s compliance with the Office of Foreign Assets Control (OFAC) Regulations; and,
- Submit a written plan for independent testing of the Branch’s compliance with all applicable BSA/AML requirements.
Further, within 10 days, the Bank and Branch must designate an officer to be responsible for coordinating and submitting all of the written plans and programs required under the terms of the Agreement and must submit quarterly written progress reports detailing the all actions taken to secure compliance with the provisions of this Agreement.
The Agreement with Sumitomo Mitsui is the latest of a recent string of BSA/AML actions taken against foreign banks. In February of this year the Office of the Comptroller of the Currency (OCC) issued a cease and desist order against three branches of MUFG Bank Ltd., Tokyo, Japan, for violations of BSA and related rules. In June 2018, the New York branch of the Bank of China was cited for BSA/AML deficiencies and assessed a $12.5 million civil money penalty by the OCC. And in April of 2018, a New York branch of Taiwan-based Hua Nan Commercial Bank Limited of Taipei City, Taiwan, agreed to a cease and desist order after “significant deficiencies” in risk management and compliance relating to BSA/AML were identified by the FRB-NY.