The Federal Reserve Board has terminated an enforcement action it initiated against Pasadena-based East West Bank in 2015 for alleged deficiencies in complying with the Bank Secrecy Act and with “applicable laws, rules, and regulations relating to anti-money laundering.”
A Fed announcement Tuesday said the action has been terminated as of July 18.
East West Bank, a state-chartered, Federal Reserve member bank with about $37.6 billion in assets, agreed in writing to the enforcement action on November 9, 2015, with East West Bank general counsel Douglas P. Krause signing on behalf of the bank.
The action was reportedly aimed at correcting shortcomings in the bank’s compliance with anti-money laundering requirements, including compliance with the Bank Secrecy Act (BSA).
In the action, the Fed said East West Bank maintained a branch in Hong Kong and had various foreign subsidiaries, including representative offices and an international banking subsidiary in Shanghai, China, as well as various domestic subsidiaries.
An examination by the Federal Reserve and the California Department of Business Oversight Division of Financial Institutions that year identified the alleged deficiencies, according to the written agreement signed in 2015.
In the agreement, the Fed said it required the East West Bank board of directors to address the deficiencies by strengthening the Fed’s oversight and by submitting a written plan to this effect. The plan would describe the actions the board of directors intend to take to improve the bank’s compliance with the BSA and AML requirements, as well as with regulations issued by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury.
At a minimum, the plan required the establishment of a BSA/AML and OFAC compliance committee, most of the members of which had to be outside directors. The plan was also required to contain clearly defined roles and responsibilities for senior bank management to oversee compliance with the BSA/AML requirements and the OFAC regulations.
Other than developing and adopting a BSA/AML compliance program, the bank was also required to develop and adopt “appropriate levels of customer due diligence,” and to ensure that all suspected violations of law or suspicious transactions are identified and reported in a timely, accurate and complete manner to law enforcement and supervisory authorities.
The Federal Reserve also required the bank to engage an independent consultant acceptable to the Reserve Bank that conducted a review of account and transaction activity, especially those associated with any high-risk customer accounts conducted through the bank between April 1, 2014 and October 31, 2014.
The review was intended to find out whether any suspicious activity involving high-risk customer accounts or transactions through the Bank have been properly identified and reported in accordance with reporting regulations. The consultant was required to submit a written report detailing the findings.
Tuesday’s announcement terminating the enforcement action indicates that East West Bank has been able to meet the requirements as agreed to with the Federal Reserve.
East West Bank is a wholly owned subsidiary of East West Bancorp, a publicly owned company with total assets over $38.1 billion, and is one of the largest independent banks headquartered in California.
The bank operates in over 130 locations mainly in the United States and Greater China markets. In China, East West’s presence includes full-service branches in Hong Kong, Shanghai, Shantou and Shenzhen, and representative offices in Beijing, Chongqing, Guangzhou, Taipei, and Xiamen.
For more information about the bank, visit www.eastwestbank.com.