December 15, 2016 / 5:13 PM / 3 years ago

New York regulator fines Italy's Intesa Sanpaolo $235 million

NEW YORK (Reuters) - Intesa Sanpaolo SpA, Italy’s biggest retail bank, agreed on Thursday to pay a $235 million fine to New York state’s financial regulator for anti-money laundering failures and violations of bank secrecy laws, officials said.

The Intesa Sanpaolo logo is seen in Milan, Italy, in this January 18, 2016 file photo. REUTERS/Stefano Rellandini

Intesa Sanpaolo and its New York branch mismanaged its transaction monitoring system and failed to identify suspicious transactions involving shell companies, the New York State Department of Financial Services said in a statement.

The bank also trained employees to handle Iranian transactions so they could not easily be tied to sanctioned entities and deliberately concealed information from bank examiners, the regulator said.

Many of the violations date back a decade or more, although the regulator found the bank failed to properly monitor and review transactions as recently as this year.

In a statement, Intesa Sanpaolo said the penalty related to “certain weaknesses and deficiencies in the anti-money laundering controls, policies and procedures of the bank’s New York branch.”

The bank said the enforcement action began in 2007 and noted that a criminal probe by U.S. authorities ended in 2012 with no charges. The criminal probe was over how the bank cleared U.S. dollars for countries subject to U.S. sanctions, the bank said. The bank did pay $2.9 million to the U.S. Treasury Department in 2013 over apparent sanctions violations.

The New York regulator’s investigation found that the bank’s state branch failed to properly review thousands of alerts generated by its monitoring system, which uses keywords and algorithms to identify suspicious transactions.

“The negligent conduct of this bank is the type of conduct that can fuel international criminal activity, thereby seriously compromising the security of the international financial system,” Maria Vullo, the department’s superintendent, said in the statement.

As part of a consent order, the bank agreed to continue to retain an independent consultant who would audit a review of the New York branch’s transactions since 2014. The bank also agreed to submit a revised compliance program.

The Intesa Sanpaolo fine follows the regulator’s actions earlier this year over anti-money laundering violations by other foreign banks.

Agricultural Bank of China Ltd agreed to pay $215 million last month, and Mega Financial Holding Co Ltd, one of Taiwan’s biggest banks, was fined $185 million in August.

Intesa Sanpaolo, which has over 4,000 branches worldwide, said it would book the fine in the fourth quarter.

Reporting by Karen Freifeld; Editing by Jonathan Oatis and Andrew Hay

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