Fed Faults China Construction Bank Over Anti Money-Laundering Efforts

By Ryan Tracy And Lingling Wei 

        U.S. regulators faulted China Construction Bank Corp. for deficiencies in its program to spot money laundering, the latest U.S. crackdown on foreign-owned firms.
        The Federal Reserve and New York's state regulator found problems at the New York branch of one of China's largest banks, according to an enforcement action released Tuesday.
        The regulators required the bank to better follow basic elements of U.S. law, including responding to regulators' information requests, identifying risky customers, tracking transaction data, documenting and investigating suspicious activity and monitoring so-called correspondent accounts with other banks. They required the firm to write and execute a plan to fix the problems, and its board of directors agreed to do so on July 13, the document said.
        The Fed and other U.S. agencies have stepped up oversight of banks' anti-money-laundering programs in recent years as they try to root out illicit activity in the U.S. financial system. Large, overseas firms such as BNP Paribas SA and HSBC Holdings PLC have paid multibillion-dollar penalties for faulty compliance programs.
        The regulatory action Tuesday didn't include a fine. U.S. agencies could issue one later if the bank fails to fix the problems or if it is found to have violated anti-money-laundering laws.
        The bank also must hire an independent third party to evaluate whether it properly identified and reported suspicious transactions exchanging U.S. dollars and foreign currency during the second half of 2013.
        Press officials at China Construction Bank headquarters in Beijing couldn't be reached for comment Tuesday night.
        China Construction Bank, the second-largest state-owned lender in China by profits, launched operations in New York in 2009, its first branch in North America. Like other big Chinese banks, including Industrial & Commercial Banks of China Ltd. and Bank of China Ltd., China Construction Bank has been branching out in foreign markets in a bid to provide financing for Chinese companies seeking to expand overseas.
        In the past seven years, the New York branch of China Construction Bank has mainly focused on offering trade financing for Chinese companies.
        With its relatively narrow focus in the American market, China Construction Bank still sees China's own market as its main source of growth, according to the bank's executives. It is the largest home-mortgage lender in China.
        Write to Ryan Tracy at ryan.tracy@wsj.com and Lingling Wei at lingling.wei@wsj.com
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        (END) Dow Jones Newswires

        July 21, 2015 11:55 ET (15:55 GMT)

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