The Industrial and Commercial Bank of China (ICBC) has agreed to pay around USD 32 million to settle investigations related to compliance issues in New York. The settlements were reached with the Federal Reserve and the New York State Department of Financial Services (NYDFS).

According to the Wall Street Journal, the NYDFS investigation, covering the period from 2018 to 2022, revealed deficiencies in ICBC's New York branch's anti-money-laundering and Bank Secrecy Act compliance programs. Specifically, in 2018, the Federal Reserve issued a cease-and-desist order to ICBC and its New York branch, instructing them to address identified deficiencies in corporate governance, management oversight, customer due diligence, and suspicious activity monitoring and reporting, as outlined in the New York State Department of Financial Services (NYDFS) order. Despite these directives, the deficiencies persisted across multiple examination cycles conducted by both the Federal Reserve and NYDFS according to complianceweek.com.

The same source reports that a breach of confidential supervisory information (CSI) occurred in September 2021 when a New York-based employee was transferred to an overseas affiliate. The NYDFS order specified that approval for the transfer necessitated disclosing whether the employee or the New York branch was subject to regulatory or disciplinary investigations. Obtaining this information required permission from both the NYDFS and the Federal Reserve before sharing it with the overseas regulator.

The USD 30 million settlement addresses these findings, and the Federal Reserve also imposed a USD 2.4 million fine on ICBC for alleged unauthorised use and disclosure of confidential supervisory information. The ICBC’s response NYDFS noted instances of backdated compliance documents and a delay in reporting the issues. ICBC, in response to the settlements, emphasised its remediation efforts.

The bank stated that the settlement doesn't accurately reflect the current state of compliance programs and internal controls at its New York branch, asserting that compliance and risk management are top priorities. According to NYDFS, a 2023 examination determined that the compliance program at ICBC's New York branch is now considered adequate. The bank has reportedly remediated alleged problems in its anti-money laundering, Bank Secrecy Act, and sanctions compliance programs over the past few years.

As part of the settlement, ICBC will submit a plan to NYDFS outlining improvements to its compliance policies and procedures, corporate governance, management oversight, customer due diligence requirements, and the handling of confidential supervisory information. .