Financial
Crimes Enforcement Network
Joint Release Office of the Comptroller of the Currency
FinCEN and OCC Assess $24 Million Penalty against Arab Bank Branch
WASHINGTON – The Financial Crimes Enforcement Network and
the Office of the Comptroller of the Currency announced today that they have
each assessed a $24 million civil money penalty against the New York Branch of
Arab Bank for violations of the Bank Secrecy Act. Both penalties will be satisfied by a single $24 million payment
to the U.S. Department of the Treasury.
In taking these actions, the
agencies determined that the New York Branch of Arab Bank failed to implement
an adequate anti-money laundering program to comply with the Bank Secrecy Act
and manage the risks of money laundering and terrorist financing in connection
with United States dollar clearing transactions. The New York Branch also violated the suspicious activity
reporting requirements of the Bank Secrecy Act.
“Today’s actions confirm the importance of establishing
appropriate systems and controls to identify and timely report suspicious
activity in connection with United States dollar clearing activities through
correspondent banking relationships,” said William J. Fox, Director of the
Financial Crimes Enforcement Network.
When functioning as a correspondent or intermediary institution for
funds transfers, the New York Branch of Arab Bank failed to implement
sufficient internal controls and testing procedures to ensure compliance with
the suspicious activity reporting requirements of the Bank Secrecy Act for
transactions involving originators and beneficiaries that did not maintain an
account directly with the New York Branch of Arab Bank.
“While the Bank Secrecy Act obligations associated with
funds transfers involving non-accountholder originators and beneficiaries
differ from transactions conducted by direct accountholders, intermediary and
correspondent financial institutions must have systems and controls in place
that are commensurate with the risks of money laundering and terrorist
financing,” said Fox.
"It
is vitally important that banks have effective anti-money laundering programs
in place to ensure that the financial system is not used to facilitate
terrorism or criminal activity," said Comptroller of the Currency John C.
Dugan. "That doesn't mean that banks
should cease doing business with legitimate customers or file unnecessary
Suspicious Activity Reports. It does
mean that they must have a program in place that is sufficient to address the
risk of their particular business activities."
These actions follow two separate enforcement actions in
February in which the OCC required Arab Bank to take steps to preserve asset
levels, pay off depositors and to improve its compliance program and internal
controls. The February order also
required the branch to convert to an uninsured agency office with limited
banking activities and to shut down its wire transfer operations.
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Media Contacts:
OCC Robert
M. Garsson (202) 874-5770
FinCEN Sheri
James (703) 905-3770
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