KARACHI: The Federal Reserve Bank of New York (FRBNY) on Thursday directed United Bank Limited (UBL) Pakistan to conduct third party review of its New York branch’s compliance with the anti-money laundering (AML) /Bank Secrecy Act (BSA) requirements.
The UBL and its New York branch have entered into a written agreement (WA 2018) with the 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.
The 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 Programs
The FRBNY on Friday notified that the most recent examination of the UBL’s New York branch identified deficiencies relating to the Branch’s risk management and compliance with applicable federal and state laws, rules, and regulations relating to AML compliance, including the BSA.
According to the new agreement, the FRBNY directed the UBL to submit a written plan to enhance oversight, by the management of the Bank and the Branch, of the Branch’s compliance with the BSA/AML Requirements and the regulations issued by the Office of Foreign Assets Control of the United States Department of the Treasury (OFAC) within 30 days.
The Federal Reserve Bank further directed the UBL to retain an independent third party to conduct a comprehensive review of the Branch’s compliance with the BSA/AML Requirements and prepare a written report of findings, conclusions, and recommendations within 30 days.
Also, within 10 days of the engagement of the independent third party, but prior to the compliance review, the bank and the branch shall jointly submit to the Reserve Bank for approval an engagement letter that provides, at a minimum, for the independent third party to conduct a comprehensive assessment of the Branch’s BSA/AML compliance program, policies, and procedures; complete the Compliance Review within 60 days of the Reserve Bank’s approval of the engagement letter.
The UBL in its notification sent to Pakistan Stock Exchange said the Federal Reserve Bank did not impose civil penalty on UBL, adding that it is undertaking all steps to further strengthen its compliance framework to fully comply with the WA 2018.
The FRBNY said within 60 days of the submission of the Compliance Report, the UBL and its 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.
“Within 30 days after the end of each calendar quarter following the date of this agreement, the bank and the branch shall submit to the Reserve Bank written progress reports detailing the form and manner of all actions taken to secure compliance with the provisions of this agreement and the results thereof. The Reserve Bank may, in writing, discontinue the requirement for progress reports or modify the reporting schedule”,the FRBNY ordered.