JP Morgan's NZ branch gets formal warning over lack of risk assessment plan in 2013

JP Morgan Chase Bank's New Zealand branch have been given a formal warning by the Reserve Bank for a four-month period in 2013 when it didn't have appropriate risk assessment measures in place to meet anti-money laundering legislation.

The central bank today issued a formal warning to the JPMorgan branch, saying it "has reasonable grounds to believe that for a period of approximately four months in 2013" the lender's risk assessment didn't fully meet all the requirements of the Anti-Money Laundering and Countering Financing of Terrorism Act.

The warning says JP Morgan didn't meet parts of the legislation requiring the risk assessment be in writing and identify the risks it faces in the course of its business, describe how it ensures the assessment stays current, and allows it to determine the level of risk involved in relation to the obligations of the anti-money laundering act.

"A reporting entity's risk assessment comprises the essential foundation of an adequate and effective AML/CFT programme," the central bank says. "The RBNZ notes that since 2013 JPMNZ [JPMorgan NZ] has taken the action that JPMNZ considers necessary to ensure that its risk assessment complies with section 58 of the Act."

The Reserve Bank, Department of Internal Affairs and Financial Markets Authority officially started monitoring financial institutions under the anti-money laundering regime from June 30, 2013, with an initial focus on monitoring and compliance to ensure firms were able to identify and report suspicious activity.