The US Federal Reserve has ordered ABN Amro to pay $80 million in fines for lacking adequate risk management that could identify money laundering activities in its overseas branches. According to the order released on December 19, the Amsterdam-based bank must also submit plans for a new global risk management and compliance system within 90 days.“ABN Amro lacked effective systems of governance, audit and internal control to oversee the branches with respect to legal, compliance and reputational risk, and failed to adhere to those systems it did have,” said the order.
The order claims overseas branches developed “special procedures” to circumvent regulation, in particular the Iranian Transactions Regulations and the Libyan Sanctions Regulation, which restricts the types of transactions banks can conduct on behalf of these governments.
According to the order, prior to August 1, 2004, ABN Amro overseas offices modified documents to eliminate any references to a bank owned by the Iranian government and another one owned by the Libyan government. Thereafter, ABN Amro’s New York offices and Chicago office failed to notice the papers were doctored, issuing letters of credit and transferring funds on behalf of the restricted entities.
A total of $40 million will be paid to the Fed and the US Treasury Department’s Office of Foreign Assets Control. The New York State Banking Department and the Illinois Department of Financial and Professional Regulation will receive $20 million and $15 million, respectively. ABN Amro will also make a $5 million voluntary payment to the Illinois Bank Examiners’ Education Foundation.
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