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NYDFS

One would think that when the New York Department of Financial Services, known for massive penalties against foreign, especially European banks, to say nothing of "perp walks" and heavy handed and highly prejudicial media statements, announces a penalty of USD60 million that it's for lightweight failures. Nothing could be further from the truth and the reality demonstrates why negotiated settlements are nearer to bribes than to justice, says Nigel Morris-Cotterill.

The USA bangs on about how good its counter-money laundering laws are (they aren't) and New York State attacks foreign banks for failures on its soil (whilst ignoring breaches by US headquartered banks). Yet by its own admission (albeit unthinking), New York is far behind good practice in relation to company registrations. In fact, it's a secrecy jurisdiction that also facilitates confusion as to corporate identity and allows the hiding of both legal and beneficial ownership which benefits money laundering and terrorist financing.

Habib Bank of Pakistan has one office in the USA and it's in New York where the Department of Financial Services has determined that there are "serious and persistent" failings in its counter-money laundering policies and procedures. The DFS said that it plans to fine the bank an amount of "up to USD630 million" and the bank's response is to say that it will close its US operations. It will, the bank said, not consent and will challenge the proposed fine in the US Courts. Fighting talk. But as of yesterday, something changed. If nothing else, the penalty, when levied, did not come close to that headline figure - and the bank did consent. But what also changed was that it became more widely known that the bank had a poor history.

On 30 January 2017, the NYDFS superintendent, Maria Vullo, announced that Deutsche Bank would pay a fine of USD425 million for failures in counter-money laundering systems and controls, in an investigation closely linked with a similar investigation into the same facts by the UK's Financial Conduct Authority. What the NYDFS found is disturbing.