U.S. Slaps Ag Bank of China with Anti-Money Laundering Penalty

Agricultural Bank of China has agreed to pay a $215 million penalty for falsifying transaction documents involving China and Russia and trying to cover up dollar trades with sanctioned Middle East countries, a New York bank regulator announced on Friday.

The bank has not responded to Caixin's request for comment on Saturday.

The New York State's Department of Financial Services (DFS) said Friday that officials with the Chinese bank's New York branch were found to have obscured U.S. dollar transactions that might reveal violations of sanctions or anti-money laundering laws. Bank officials also silenced a whistleblower in the bank and their actions led to the officer's resignation in 2015, the DFS said.

Compliance personnel at the Chinese bank's New York branch discovered that certain invoices involving China and Russia appeared to have been counterfeit or falsified. Other documents suggested that U.S. dollar trades had been made with Iranian counterparties, and included information indicating dollar transactions were made for the benefit of a sanctioned Iranian party, the DFS said in a statement on its website.The DFS also accused the Chinese bank of conducting dollar transactions involving an Afghan Bank client associated with narcotics traffickers and illicit cash flows.

The U.S. regulators have been taking harsher measures in anti-money laundering supervision in recent years.

France's BNP Paribas was ordered to pay $8.9 billion in fines in 2014 for transactions involving clients in sanctioned countries.

In 2015, the Construction Bank of China received a warning from U.S. regulators for alleged money laundering violations, though no fine was imposed.

According to the Financial Times, the latest fines on the Agricultural Bank of China are the first such penalty on an Asian bank beside Japanese banks.

Contact reporter Wu Gang (gangwu@caixin.com); editor Ken Howe (kennethhowe@caixin.com)