International Bank Fined $29 Million for BSA/AML Deficiencies

The Board of Governors of the Federal Reserve System ("FRB") announced a $29 million penalty against an international bank for anti-money laundering ("AML") violations.

In an Order to Cease and Desist, the FRB found that Taiwan-based Mega International Commercial Bank Co., Ltd. (the "Bank") had AML deficiencies in its three U.S. branches in Chicago, New York, and San Jose. In particular, the FRB identified issues with risk management and violations of both state and Federal AML laws, rules and regulations, including the Bank Secrecy Act ("BSA").

The Order requires the Bank's board of directors to submit a written plan for improving senior management oversight and building an effective, sustainable framework for BSA/AML compliance. The conditions for the individual branches include, among other requirements, submitting plans for enhanced (i) internal controls, (ii) employee training, (iii) customer due diligence processes and procedures, (iv) suspicious activity monitoring and reporting, and (v) compliance with Office of Foreign Assets Control regulations.

In addition to imposing the fine, the Order requires the Bank's branches to submit periodic progress reports to their applicable Federal Reserve Banks detailing steps taken to comply with the conditions of the Order.

Commentary

This Federal Reserve action is the latest in a series of anti-money laundering enforcement actions by the Federal...