The Federal Reserve Board has hit M&T Bank (MTB) with an order detailing the fixes it must make to its anti-money-laundering controls.
The Buffalo, N.Y., company this spring postponed the closing of its acquisition of Hudson City Bancorp (HCBK) after the Fed raised concerns about M&T's compliance with anti-laundering and other Bank Secrecy Act rules.
The written agreement, dated June 11 and announced Tuesday, lays out steps that M&T must take to address deficiencies in its "firm-wide compliance risk management program." Those issues turned up during the Fed's most recent inspection of the $81 billion-asset company.
The agreement requires M&T to submit plans to improve internal money laundering controls and establish a process for monitoring and reporting suspicious transactions. It must also hire an independent consultant to review all "high-risk" transactions made between last July and January.
The enforcement action is "the next step in the process that began when we announced that the Hudson City merger would be delayed," an M&T spokesman said on Tuesday. He added that the Fed's action addressed the same issues that caused the acquisition's delay.
In April, M&T pushed back the completion date for its planned $3.7 billion purchase of Hudson City Bancorp to January, to provide more time to address the Fed's compliance concerns. Rene Jones, the company's chief financial officer, said around that time that he was "optimistic" that M&T could assuage the Fed's concerns and complete the deal.
"We have every intention that we're going to remediate the issues that are outstanding," Jones said during an April 15 conference call to discuss quarterly results. "We're going to do so quickly and in a manner that probably exceeds expectations."