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US regulator fines ICBC unit over anti-money laundering violations

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US regulator fines ICBC unit over anti-money laundering violations

Industrial & Commercial Bank of China Ltd.'s U.S. unit agreed to pay a US$5.3 million fine to the U.S. Financial Industry Regulatory Authority, or FINRA, over inadequate anti-money laundering measures and other financial violations.

The regulator found that Industrial & Commercial Bank of China Financial Services LLC cleared and settled the liquidation of more than 33 billion shares of so-called penny stocks, which generated about US$210 million for its customers from January 2013 to September 2015, according to a May 16 release.

However, the company did not have anti-money laundering measures in place to detect and report potentially suspicious transactions, particularly involving penny stocks.

FINRA found that prior to June 2014, the unit had no surveillance reports that monitored potentially suspicious penny stock liquidations and did not require its employees to document their review of the reports it had in place. It also lacked systems and procedures to check whether certain activities were unusual for any given customer.

The watchdog also found that the company assigned critical monitoring duties involving penny stocks to a nonexistent employee title, with no employee actually performing such duties.

Without admitting or denying the charges, the U.S unit agreed to settle the allegations.

The sanction comes after the lender agreed to pay US$860,000 to the U.S. Securities and Exchange Commission for allegedly failing to report suspicious activities in penny stock transactions.