Davis Polk advised Intesa Sanpaolo S.p.A. in connection with a consent order issued on December 15, 2016 by the New York State Department of Financial Services.

DFS Superintendent Maria T. Vullo announced that Intesa and its New York branch will pay a $235 million civil monetary penalty arising from certain weaknesses in the bank’s current AML controls identified in an investigation conducted by an independent consultant, as well as identified AML deficiencies from the 2005–2006 period and non-transparent payment activity undertaken in the 2002–2006 period. In addition, the bank is required to conduct a transaction review for the sole purposes of remediating any identified current AML deficiencies and the independent consultant’s engagement has been extended for up to two years, in order to audit the bank’s transaction review results and to oversee the bank’s remediation efforts.

This fine arises from a public supervisory action, in the form of a written agreement among Intesa, its New York branch, the Federal Reserve Bank of New York and the New York State Banking Department (predecessor agency to the DFS), which was entered into in 2007. The bank was also subject to a criminal investigation initiated in 2008 by the New York District Attorney’s Office and the Department of Justice. This was concluded in 2012, when both law enforcement agencies determined to terminate their investigation and not to take any action against the bank. The bank self-disclosed certain violations of U.S. economic sanctions regulations to the Office of Foreign Assets Control regarding the processing of bank transfers in dollars through the SWIFT interbank payments service, cleared through U.S. banks. As a result of these disclosures, in 2013 the bank settled with OFAC and agreed to pay a fine of $2.9 million.

The Davis Polk team included partners Luigi L. De Ghenghi and Jennifer G. Newstead, counsel Carey R. Dunne and Jeanine P. McGuinness and associates Gina M. Cora, Polly Klyce Pennoyer, Julien du Vergier and Craig D. Kennedy. The members of the Davis Polk team are based in the New York and Washington DC offices.