New York state financial regulators fined the Dubai-based Mashreqbank $40 million, saying it cleared millions of high-risk transactions with scant safeguards against money laundering and terrorism finance.
The bank's New York branch kept shoddy records and had internal controls that were not sufficient to prevent violations of US sanctions, according to the New York Department of Financial Services.
"Mashreqbank failed to fully comply with critical New York and federal banking laws aimed at combating international money laundering, terrorist financing and other related threats," DFS Superintendent Maria Vullo said in a statement.
Mashreqbank is the UAE's oldest and largest lender, with branches across the Middle East and Asia.
Between 2016 and 2017, the bank's New York branch processed millions of transactions with an aggregate value of $717 billion for foreign customers in high-risk jurisdictions, the statement said.
Reviews by DFS and New York Federal Reserve Bank examiners in 2016 and 2017 found deficiencies in bank policies, including failing to show how bank staff determined certain transactions were acceptable, the statement said.
Mashreqbank will hire an outside consultant to improve how it complies with the law, according to DFS, which noted the bank's "strong cooperation" and commitment to correcting shortcomings.
Mashreqbank said it was devoting "substantial financial and corporate resources" to improving legal compliance at its New York branch.
"Mashreqbank remains committed to providing its customers with superior and robust banking services while maintaining and enhancing its compliance with regulatory expectations," it said in a statement.
Re-disseminated by The Asian Banker from afp.org