SBI pays up $7.5m fine

New York, Dec 9: The State Bank of India (SBI) has paid a total of $7.5 million in fine in the United States for its apparent violation of regulations relating to Bank Secrecy Act, federal regulators say.
The US Federal Reserve Board, Federal Deposit Insurance Corporation (FDIC) and New York Banking Department said they had issued on November 14 an order to “cease and desist” and an order of assessment of a civil penalty and monetary payments against SBI, Mumbai, and its three branches in New York, Chicago and Los Angles.

“The SBI, without admitting any wrongdoing, consented to the issuance of the order,” they said in a joint press release. The “cease and desist” forbade the bank from “opening any new account in the US” till it complies with a six-step reform of its bank secrecy compliance procedures.

The fines, the press release said, result from the bank’s “apparent” engagement in “unsafe and unsound practices related to its failure to establish and maintain procedures reasonably designed to assure and monitor compliance with the Bank Secrecy Act, violation of the FDCI’s regulations relating to Bank Secrecy Act compliance, failure to maintain correct and accurate books and records and violation of the New York state law relating to the bank’s obligation to maintain accurate books and records and to make reports to the New York state banking department.”

One half of the amount of the fine would be paid to US’s department of treasury and the other half to the state of New York under the federal and state laws.

The order, issued on November 13, says that within 30 days the bank shall engage a qualified independent firm, acceptable to supervisors, to conduct a comprehensive review of its US operations and to assist in the development of polices and procedures designed to ensure that it conducts its US activities in a safe and sound manner and complies with all applicable federal and state laws. The order requires the independent firm to issue a report on the balance sheet for each of the New York branches as also a consolidate one and accompany disclosures including off-balance sheet amounts and assets held on behalf of others as on June 30 last.

The bank is expected to provide the independent firm complete access to all employees, books and records. The order asks the independent firm to make all efforts to complete its work within 120 days and provide its report simultaneously to both the regulators and the bank.

— PTI