Bank of China Targeted by U.S. Over Money-Laundering Controls

Bank of China Ltd. must boost its money-laundering protections in the U.S. in response to a regulator’s enforcement action that cited deficiencies involving one of the world’s biggest lenders.

The yet-to-be-disclosed case was brought by the U.S. Office the Comptroller of the Currency, according to a copy of the regulator’s order obtained by Bloomberg News. The OCC routinely leaves a bank’s specific transgressions out of enforcement actions, so the agreement doesn’t detail what Bank of China’s U.S. operations did wrong. The regulator hasn’t imposed a fine.

It’s China’s “most international and diversified bank” — according to documents it filed with U.S. regulators — and is still majority-owned by the government. Bank of China’s global reach was built over a century, from its one-time status as the country’s central bank to its role managing China’s foreign-exchange operations. It listed as a public company in 2004 and bought a new office tower near Manhattan’s Bryant Park last year.

In July, another giant, state-owned Chinese bank, China Construction Bank Corp., faced an enforcement action from the Federal Reserve similar to Bank of China’s OCC action. The Fed ordered the lender to tighten the money-laundering controls in its New York branch.

China Construction Bank Corp. has been ordered to tighten money-laundering controls in its New York branch to resolve an enforcement action brought by the Federal Reserve and the New York Department of Financial Services.

The bank, the world’s second-largest by assets, is working to address “deficiencies relating to the branch’s risk management and compliance” with the Bank Secrecy Act, the regulators said Tuesday in a statement that didn’t detail any wrongdoing. The order calls for better oversight of account holders and creation of a new internal audit program.

Construction Bank, based in Beijing, has branches in 24 countries and offers corporate banking services, including deposits, trade finance, international settlement and syndicated loans to major Chinese firms and local companies. Its New York office is regulated by DFS and the Federal Reserve Bank of New York.


Mildred Harper, chief compliance officer at the New York branch, and a press officer at Construction Bank’s Beijing headquarters both declined to comment. Eric Kollig, a Fed spokesman, declined to comment further on the regulators’ actions.

Shares of Construction Bank fell 0.6 percent in Hong Kong as of 9:31 a.m.

Construction Bank set up a representive office in New York in 1997 and upgraded it to a wholesale-banking branch in 2009, the first in Americas.

The bank this month appointed Wang Zuji, a former vice chairman of the China Insurance Regulatory Commission, as its president and vice chairman of the board, according to a statment. He signed the agreement with the Fed and DFS.