Shinhan Monetary’s U.S. Unit Ordered to Beef Up Cash Laundering Oversight

Shinhan Financial institution America neither admitted nor denied any allegations of unsound banking practices or violations of the regulation, the order, which was issued with Shinhan Financial institution America’s consent, stated. The FDIC issued an analogous order demanding enhancements within the financial institution’s inner controls in 2017. The company stated its 2021 report is confidential.

A consultant for the financial institution stated it wouldn’t be applicable to touch upon an ongoing case.

Shinhan Monetary Group, the last word mum or dad firm of Shinhan Financial institution America, is one in every of South Korea’s main monetary conglomerates with the equal of $486 billion in property in 2021, in accordance with its most up-to-date annual report. 

Shinhan Financial institution America operates 15 branches within the U.S., largely in locations with comparatively massive Korean populations, together with New York, California, Texas and Georgia. 

The FDIC order requires Shinhan Financial institution America to retain a 3rd social gathering to assessment the administration and staffing of its AML program, and directs the financial institution’s board to instantly enhance its oversight of this system. Moreover, Shinhan was ordered to make sure it has precisely assessed its dangers and to revise its inner controls.

The FDIC additionally ordered Shinhan Financial institution America to undertake an efficient coaching program to teach its workers on AML insurance policies and to validate its suspicious-activity monitoring system. The financial institution should assessment transactions from September 2020 onward for suspicious exercise, and might be ordered to assessment transactions relationship again to 2017.

Gu Seon Tune, Shinhan Financial institution America’s former chief audit govt, sued the financial institution final 12 months in New York for allegedly firing him after he refused to downplay the weaknesses within the financial institution’s AML program. 

Mr. Tune in his lawsuit stated the then-chief govt of Shinhan Financial institution America demanded that he alter an inner audit report’s conclusion that Shinhan Financial institution America had an unsatisfactory AML program. 

That report, which was produced following the FDIC’s 2017 order, attributed the alleged issues to inappropriate administration oversight and a excessive turnover within the workplace supervising this system, Mr. Tune stated. 

Mr. Tune stated he later submitted the unfavorable report back to an FDIC examiner and was subsequently fired. He sued the financial institution underneath a U.S. regulation that protects financial institution workers from retaliation in the event that they have interaction in whistleblowing. 

That lawsuit continues to be underway. Shinhan Financial institution America in a authorized submitting has denied Mr. Tune’s allegations about giving directions to Mr. Tune to change the audit report and that he was fired as a result of he supplied the report back to the FDIC. 

A lawyer for Mr. Tune didn’t reply to a request for remark.

Write to Richard Vanderford at Richard.Vanderford@wsj.com