Agricultural Bank of China Ltd will pay a $215 million penalty for violating New York state’s anti-money laundering law, the state’s financial regulator said on Friday.
Bank officials engaged in “intentional wrongdoing,” including masking suspicious transactions at its New York branch, the New York State Department of Financial Services said.
The bank also “silenced” the branch’s chief compliance officer, who raised concerns to managers about an “alarming” pattern of suspicious financial transactions, the regulator said.
The bank, in a consent order with the regulator, agreed to put in an independent monitor to address “serious deficiencies,” the regulator said.
Officials at Agricultural Bank of China and its New York branch could not be immediately reached for comment.
The bank holds total assets of about $2.8 trillion, including around $9.5 billion at the New York branch, N.Y. officials said.
Since 2013, the New York branch has cleared U.S. dollar transactions involving foreign correspondent banks in “rapidly increasing volumes,” according to the consent order.
In dollar clearing, transactions in foreign currencies between parties are satisfied in U.S. dollars using a U.S.-based bank.
In 2014, the N.Y. regulator warned the bank that its systems for monitoring suspicious transactions were inadequate, and told the bank not to boost its dollar-clearing business until it put improved surveillance measures in place.
While the practice is common, dollar-clearing can be a risky business line for banks since it is used by criminals to launder money or move money for terrorists.
“The bank willfully ignored (the state’s) warning and dollar-clearing transactions by the bank at the New York Branch skyrocketed in 2014 and 2015, creating an untenable risk at a time when the bank was not able to satisfy even basic compliance requirements,” the regulator said.