Federal Reserve enters into agreement with Japanese branch bank without imposing monetary penalty

The Board of Governors of the Federal Reserve System and Sumitomo Mitsui Banking Corporation, Tokyo, Japan, entered into an agreement on April 23, 2019 to address anti-money laundering compliance at the bank’s New York branch (“the Branch”). In a recent examination, the Board of Governors identified deficiencies relating to risk management and to the Branch’s compliance with anti-money laundering laws and applicable regulations, including the Bank Secrecy Act (“BSA”) (31 USC § 5311 et seq.) and US Treasury Department regulations enumerated in 31 CFR Chapter X, OFAC regulations under 31 CFR Chapter V, and Regulation K of the Board of Governors.  The settlement agreement requires the Branch to submit six written plans within 60 days, each containing a timeline for full implementation.  The plans entail quarterly progress reports, and cover:
  1. Enhanced oversight that describes actions that will be taken to maintain effective control over and oversight of the Branch’s compliance with OFAC regulations and BSA/AML requirements; measures to improve compliance reporting; measures to ensure appropriate tracking and escalation of BSA/AML and OFAC compliance; and policies and procedures to ensure a proactive approach to identifying, communicating and managing BSA/AML compliance risks.
  2. A compliance program with a comprehensive risk assessment that takes geographic locations and customer types into consideration, among other factors; a system of internal controls designed to ensure BSA/AML compliance, and compliance for correspondent accounts for foreign financial institutions; 
  3. A revised customer due diligence program; 
  4. An identification and timely reporting program for known or suspected violations of law or suspicious transactions, including monitoring rules, testing policies and procedures, enhanced monitoring and investigation;
  5. An OFAC regulations compliance plan;
  6. A plan for independent testing of the Branch’s compliance with BSA/AML requirements.
No monetary penalty was imposed on the bank.

Sumitomo news release |

Settlement

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