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IBK fined $35 mil. for flouting US anti-money laundering law

The Industrial Bank of Korea (IBK) must pay a $35 million fine to New York State for violating the New York

Bank Secrecy Act which governs anti-money laundering laws, New York's State Department of Financial Services (DFS) said Monday. The DFS and the Korean state-run lender have entered into a consent order over the penalty. In the U.S., a consent order is a voluntary agreement between two or more parties to a dispute. "The Industrial Bank of Korea until recently failed to demonstrate sustained improvement in its compliance with New York and federal anti-terrorism and anti-money laundering laws," Superintendent of Financial Services Linda Lacewell said in a statement. The DFS said IBK had repeated problems in maintaining adequate policies and procedures for anti-money laundering compliance, from 2010 to 2019. Due to its deficient transaction monitoring program, the IBK failed to prevent a billion-dollar fraud on its bank and New York branch in 2011, the authority said. At the time a small business owner converted payments received in Korean won from a restricted IBK account into U.S. dollars using illegal means including fictitious invoices. Most of the proceeds were cleared through the New York branch and other financial institutions in New York. The IBK's repeated deficiencies resulted in a written agreement with the DFS and the board of governors of the Federal Reserve System in 2016. In the agreement, the lender acknowledged deficiencies in the New York branch's compliance and agreed to remedy them. According to the New York authority, an inspection in 2019 concluded IBK's New York branch was adequate. "While the Department applauds the bank for its ultimate efforts after eight examination cycles of noncompliance, one positive examination report does not equate to a sustainable, safe and sound financial institution," the DFS stated in the a consent order. "Also, the written agreement remains in effect unless and until the IBK and the branch demonstrate long-term sustainability," the DFS said. "The department therefore concludes that an enforcement action remains necessary at this time to confirm the bank's continued commitment to build towards full implementation of an effective and sustainable compliance program." The DFS said it had entered into a consent order with the IBK, under which the bank must submit written plans to revise its anti-money laundering program, enhance its customer due diligence program and oversight by the bank and the New York branch of the latter's compliance with requirements and relevant state laws and regulations. Asked to comment, IBK Seoul headquarters said it had no knowledge about the penalty. By Kim Bo-eun, Published on TheKoreaTimes


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