Tuesday, October 27, 2020

New York unit of Industrial Bank of Korea fined $86 million for anti-money laundering failures

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South Korea’s state-run Industrial Bank of Korea (IBK) has been slapped with an $86 million fine from the United States after the bank’s New York branch was found to have violated anti-money laundering laws.

The state lender was charged for compliance failures that allowed nearly $1 billion to be illegally transferred to Iran in violation of U.S. sanctions, according to an agreement between IBK and the U.S. Attorney’s Office for the Southern District of New York on Monday.

IBK was fined $35 million by the New York State Department of Financial Services and $51 million by federal investigators and the New York State Attorney General’s office last month.

The New York officials said IBK and its Manhattan branch failed to implement and maintain an adequate anti-money laundering program from 2011 to 2014, despite repeated warnings.

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IBK client Kenneth Zong was caught in a money laundering scheme that involved illegal transactions of nearly $1 billion on behalf of Tehran against U.S. sanctions laws. The funds were found to have been transferred from IBK’s restricted account to Zong’s IBK account in Korean won, and later converted into U.S. dollars through the bank before being transmitted to Iranian officials worldwide.

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