Reported by: Richard Vanderford

A U.S. unit of South Korea’s Shinhan Financial Group has agreed to bolster the oversight of its anti-money-laundering program as part of a settlement with the Federal Deposit Insurance Corp.

Shinhan Bank America, which operates bank branches in the U.S., agreed to ensure that its AML program was sufficiently capable of combating the risk of money laundering, after the FDIC in 2021 found deficiencies and weaknesses, according to an FDIC order issued in October and made public Friday. 

Shinhan Bank America neither admitted nor denied any allegations of unsound banking practices or violations of the law, the order, which was issued with Shinhan Bank America’s consent, said. The FDIC issued a similar order demanding improvements in the bank’s internal controls in 2017. The agency said its 2021 report is confidential.

The FDIC order requires Shinhan Bank America to retain a third party to review the management and staffing of its AML program, and directs the bank’s board to immediately increase its oversight of the program. Additionally, Shinhan was ordered to ensure it has accurately assessed its risks and to revise its internal controls.

The FDIC also ordered Shinhan Bank America to adopt an effective training program to educate its staff on AML policies and to validate its suspicious-activity monitoring system. The bank must review transactions from September 2020 onward for suspicious activity, and could be ordered to review transactions dating back to 2017.

Gu Seon Song, Shinhan Bank America’s former chief audit executive, sued the bank last year in New York for allegedly firing him after he refused to downplay the weaknesses in the bank’s AML program.

Read full report: https://www.wsj.com/amp/articles/shinhan-financials-u-s-unit-ordered-to-beef-up-money-laundering-oversight-11669417664