HSH Nordbank in settlement on money-laundering checks
The local branch of Germany's HSH Nordbank AG will improve its anti-money laundering controls under an agreement with regulators released by the Federal Reserve on Thursday.
The Fed and the New York State Department of Financial Services entered into a settlement with HSH Nordbank's New York branch that requires the bank to address problems with its anti-money laundering compliance and requirements to report suspicious customer activity.
The settlement comes as regulators step up efforts to better police for illicit money flows. The Fed ordered Citigroup Inc last week to improve its own compliance processes.
"We will continue to be vigilant in our efforts to strengthen safeguards against money laundering across the financial system," Benjamin Lawsky, who heads New York's financial services department, said in a statement.
In a statement, the bank said it and its New York branch meet German anti-money laundering requirements, but that its New York branch does not fully meet U.S. rules.
"HSH is fully aware of the importance of the U.S. requirements and has pledged to do all necessary reworks," the bank said. The bank also said regulators did not object to any specific customers or transactions.
Under the agreement, HSH Nordbank has 30 days to hire an independent consultant to review the New York branch's compliance with anti-money laundering laws.
The review is expected to include as assessment of the bank's policies and procedures, the duties and authority of its compliance officers, and a review of its policies for identifying and reporting suspicious activity.
After the review, the consultant is expected to help the bank develop and implement new policies, according to the settlement.
Sixty days after, the bank must submit a report detailing the findings of the review and submit several improvement plans, including one to improve management oversight of its compliance program.
The new settlement stems from examinations the Federal Reserve and the New York banking and insurance regulator conducted in 2010 and 2011 that found continuing problems with the bank's anti-money laundering procedures, a person familiar with the reviews said.
(Reporting by Aruna Viswanatha, Karen Freifeld and Andreas Kroener; Editing by Jeffrey Benkoe, Bernard Orr)