NYDFS Mashreqbank $40mn AML

On Oct. 10, NYDFS fined Mashreqbank of UAE, $40mn for AML.

  • UAE-based Mashreqbank and NY branch, violated AML and recordkeeping laws.
  • Multiple deficiencies in bank's compliance with AML laws and OFAC regulations.

Alleged Violations

  • Violations occurred in US dollar clearing operation about the New York branch.
  • Follows examinations by DFS and Federal Reserve Bank of New York (FRBNY).
  • Failed to provide oversight for transactions by customers in high-risk regions.
  • Mashreqbank is oldest, largest UAE private bank, NY branch is only one in US.
  • Branch offers correspondent banking and trade finance services dollar clearing.
  • Services to clients located in Southeast Asia, the Middle East and North Africa.
  • Such regions that present a high risk in connection with financial transactions.
  • Did substantial dollar clearing, in 2016, 1.2mn transactions, valued of $367bn.

Exams of NY Branch

  • DFS conducted safety and soundness exam of NY branch’s operations in 2016.
  • Found branch unable to meet commitments to improve its compliance function.
  • DFS gave branch low overall score, whereas two years earlier, was satisfactory.
  • Downgrade due to deficiencies in BSA/AML program, defects in OFAC program.
  • Policies lacked detail, nuance, complexity, little more than citing rule language.
  • Follow-up exam at end 2017, found records re alerts lack detailed information.
  • Difficult for examiners to assess adequacy of investigation by compliance staff.
  • Transaction monitoring alert would be reviewed only once by a single reviewer.
  • Reviewer would determine if alert should be closed, without quality assurance.
  • OFAC program deficiencies in documentation on disposition of alerts and cases.
  • Compliance staff failing to substantiate rationales, for waiving alerts and cases.
  • Bank head office failed to oversee auditor hired to review 2017 AML/BSA audit.


  • Bank must hire third-party to address deficiency, review trade clearing activity.
  • DFS said appreciated Mashreqbank’s strong cooperation, to resolve the matter.
  • Mashreqbank must file with DFS revised BSA/AML compliance program for NY.
  • Program to ensure identification and timely, accurate, and complete reporting,
    by NT branch of all known or suspected violations of law or suspicious trading.
  • A written enhanced customer due diligence program that is acceptable to DFS.
  • Plan to enhance oversight by head office management of bank and NY branch.