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:
- 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.
- 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;
- A revised customer due diligence program;
- 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;
- An OFAC regulations compliance plan;
- A plan for independent testing of the Branch’s compliance with BSA/AML requirements.