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NY regulator fines NongHyup Bank over anti-money laundering rule violations

New York's financial regulator fined South Korea-based NongHyup Bank and its New York branch US$11 million for failing to implement and maintain an adequate anti-money laundering program.

A series of inspections conducted by the New York Department of Financial Services showed deficiencies at the branch since it started operations in 2013, the regulator said Dec. 21. Among other things, the branch failed to implement a proper transaction monitoring system and failed to conduct the necessary level of due diligence on the NongHyup head office account.

The branch failed to provide accurate records of all transactions and actions, in violation of New York's banking law, the regulator said. The branch's compliance department lacked sufficient resources and expertise to conduct its function properly, the regulator added.

The inspections were conducted in 2014, 2015 and 2016, and showed that the branch's compliance with anti-money laundering laws deteriorated.

The New York regulator ordered NongHyup Bank to submit a plan for setting up an anti-money laundering program, as well as to revise its internal audit program and enhance oversight. The bank is required to submit a quarterly progress report to the regulator.

NongHyup Bank is a unit of NongHyup Financial Group Inc., which in turn is a subsidiary of National Agricultural Cooperative Federation.