Shinhan Bank America to Pay $25 Million in Settlements for BSA and AML Violations

Shinhan Bank America, the U.S. branch of South Korea-based Shinhan Bank, has agreed to pay $25 million in settlements with three regulatory bodies due to admitted violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) regulations.

Here are the key details:

1. Fines and Settlements: Shinhan Bank America will pay $15 million in fines to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) for willfully violating the BSA. This violation included failing to establish and maintain an effective AML program and not promptly reporting numerous suspicious financial transactions by its customers. Additionally, a $5 million penalty from the Federal Deposit Insurance Corporation (FDIC) was credited as part of this action.
2. State Regulatory Fine: The New York State Department of Financial Services (NYDFS) imposed a $10 million fine on Shinhan Bank America as its state regulator.
3. Compliance Weaknesses: Between April 2016 and March 2021, Shinhan Bank America’s AML program was deemed inadequately designed to prevent money laundering. Key weaknesses included shortcomings in customer due diligence, risk rating, transaction monitoring, and identifying suspicious activity. This led to the delayed reporting of tens of millions of dollars in suspicious transactions, including those related to tax evasion, public corruption, money laundering, and other financial crimes.
4. Regulatory Actions: The bank had been warned by regulators about its BSA violations since 2015. It entered into a consent order with the FDIC in 2017, requiring corrective actions. Additional regulatory mandates were issued in 2022. Furthermore, the bank entered a memorandum of understanding with the NYDFS in 2020 to address AML compliance and internal audit deficiencies.
5. Cooperation and Remediation: Shinhan Bank America was praised for its cooperation with regulatory bodies. The settlement with the NYDFS mandates the creation of a written plan to enhance compliance policies, suspicious activity monitoring and reporting, and customer due diligence.
6. Bank’s Response: The bank stated that the consent orders primarily address past deficiencies in its AML compliance program and do not reflect its current status. It emphasized significant improvements made in its AML program and systems, and clarified that the orders do not involve allegations of sanctions or money laundering violations.

This development highlights the importance of robust AML programs and regulatory compliance in the banking industry, particularly in preventing money laundering and other financial crimes.