Dubai’s Mashreq pays $40m to New York regulator over compliance issues

US officials said that bank did not comply with federal banking laws aimed at combating international money laundering and terrorist financing



Dubai-based Mashreqbank has agreed to a settlement with the New York State Department of Financial Services (DFS) in relation to regulatory issues raised with its New York branch, the lender announced on Thursday.

The agreement addresses findings related to the New York branch’s ‘bank secrecy act/anti-money laundering; programme and gaps in the execution of its ‘office of foreign assets control’ sanctions compliance programme, a statement from Mashreq said.

The irregularities were identified during regulatory examinations in 2016 and 2017, when the New York branch was found to have processed “millions of transactions with an aggregate value of $717bn for foreign customers in high-risk jurisdictions”, the DFS said in a statement.

“Mashreqbank failed to fully comply with critical New York and federal banking laws aimed at combating international money laundering, terrorist financing and other related threats,” DFS superintendent Maria Vullo said.

However, Mashreq clarified that the settlement did not specify any “willful violation” and that under its terms, Mashreq has agreed to pay the DFS a total of $40m.

“Mashreqbank takes pride in having been present in New York for almost 30 years and in its substantial and continuing efforts to work alongside regulators in strengthening its compliance programmes,” it said.

“As acknowledged in the consent order, the DFS gave substantial weight to the laudable conduct of Mashreqbank in demonstrating a keen interest in, and commitment to, remediating the issues addressed, including by devoting substantial financial and corporate resources to enhancing the compliance function at the New York Branch, and in building an effective and sustainable compliance infrastructure,” it added.

The New York branch will continue to offer correspondent banking and trade finance services.

Dubai-listed Mashreqbank has regional offices in Qatar, Bahrain, Kuwait and Egypt and an international presence in London, New York, Honk Kong and Mumbai, according to its website.

The lender has 44 branches in the UAE and 20 branches / representative offices in MENA, Asia, Europe and United States.