trending Market Intelligence /marketintelligence/en/news-insights/trending/-r-mkb0vYvtMXyE9u065dg2 content esgSubNav
In This List

NY regulator fines Italy's Intesa $235M over money laundering violations


Banking Essentials Newsletter: July 10th Edition


Enabling Growth in the EMEA Loan Market


Masters of Risk | Episode 12 - Women's Panel


Banking Essentials Newsletter: June 26th Edition

NY regulator fines Italy's Intesa $235M over money laundering violations

The New York State Department of Financial Services fined Intesa Sanpaolo SpA and its New York branch $235 million over "repeated" violations of anti-money laundering laws.

The violations include "severe compliance failures" over several years that stemmed from weaknesses in the bank's transaction monitoring, the DFS said Dec. 15.

An investigation by the regulator found that the bank's New York branch failed to properly review thousands of alerts generated by its automated system, which uses keywords and algorithms to identify suspicious transactions. The department also found that the bank "deliberately concealed information" from bank examiners and "specifically trained certain employees" to handle transactions involving Iran to conceal money-processing activities, so the dealings would not be properly flagged as transactions tied to a sanctioned entity.

Between 2002 and 2006, Intesa "used opaque methods and practices to conduct more than 2,700 dollar clearing transactions, amounting to more than $11 billion, on behalf of Iranian clients and other entities possibly subject to U.S. economic sanctions," the DFS said.

As part of a consent order, the bank agreed to extend the term of engagement of an independent consultant who will review the transactions of its New York branch from 2014 to present. The bank will also be required to submit to the regulator revised compliance and internal audit programs and a plan to enhance management oversight of the New York branch within 60 days of the consultant's report.

Intesa noted the same day that the supervisory action had been initiated in 2007 and that it had also been subject to a criminal investigation beginning in 2008 by the New York District Attorney's Office and the U.S. Department of Justice. That investigation, into methods used by the bank for clearing dollar transactions through the U.S. to or from sanctioned countries, was concluded in 2012 when both agencies opted not to take any action against the bank, it said.

In addition to the negative impact of the fine on its fourth-quarter profit, Intesa will also realize a gain of about €860 million after finalizing the sale of the total share capital of payment processing units Setefi and Intesa Sanpaolo Card to a wholly owned subsidiary of Mercury UK Holdco Ltd. for a cash consideration of €1.04 billion. Mercury, which also owns Istituto Centrale delle Banche Popolari Italiane SpA, is controlled by a consortium of Advent, Bain Capital and Clessidra.

UBS Investment Bank served as financial adviser to Intesa on the transaction. Studio Pedersoli acted as legal consultant.

Intesa will book an additional €260 million fourth-quarter gain relating to a transaction to realize the value of a portfolio of real estate assets that are used in operations.