Mashreq Bank branch in Dubai Internet City 20190313
Mashreq Bank has said the dollar transactions under review were primarily those dating back to a decade ago. Image Credit: Pankaj Sharma/Gulf News

Dubai: Mashreq Bank has reached a settlement with authorities in the US over dollar-related transactions that ‘primarily took place a decade ago’. As per this deal, Mashreq will pay a penalty of $100 million to the New York Department of Financial Services.

It will then ensure that the UAE bank’s OFAC (Office of Foreign Assets Control) compliance programme is “adequate, with sufficient controls in place, and therefore did not require the bank to engage in any further remediation”.

"The OFAC settlement does not include any fine or subsequent action, in part due to OFAC’s acknowledgement of the Bank’s substantial cooperation and extensive remediation of its sanctions compliance programme, among other factors."

In the statement, the bank also said: "Mashreq is committed to complying with all laws and regulations governing our industry and fully  cooperated with these government regulators on this matter."

Mashreq has since dedicated significant resources to strengthening its compliance policies and procedures
to ensure it is conducting its business in accordance with all applicable laws and regulations in the regions
in which Mashreq operates.

- Mashreq Bank statement on US settlement

Multiple authorities

The sweeping settlement was reached with the Office of Foreign Assets Control of the US Department of the Treasury (OFAC), the Federal Reserve Board and the Federal Reserve Bank of New York.

The "core conduct" that led to the US investigations was stopped by Mashreq in 2009. "In 2015 when the bank became aware of interest by its US regulators, it immediately retained outside counsel to undertake a thorough investigation. OFAC has acknowledged in its settlement that Mashreq had intended to comply with US sanctions requirements."

The Fed deal

Even with the Federal Reserve settlement, there is no fine component. It "acknowledges Mashreq’s commitment to compliance with US law and enhancing its OFAC compliance programme. The settlement requires Mashreq to submit an acceptable programme to ensure compliance with OFAC regulations, in addition to conducting, on an annual basis, a risk-focused sampling of dollar payments and engaging an independent third-party to conduct a review of its OFAC policies and procedures."

Mashreq will also complete a worldwide OFAC risk assessment.