Turkish state-run bank Ziraat to close its New York branch after Fed probe

Turkish state-run bank Ziraat to close its New York branch after Fed probe. (HD).

The Turkish state-run bank Ziraat has notified its custormers that its New York branch, which recently came under an “enforcement action” from the U.S. Federal Reserve, will close all retail accounts by December 31.

Although the bank's letter, dated Nov. 6, says the "temporary" action is being taken to "update the IT infrastructure," Hürriyet has learned that the branch will no longer serve to retail customers, while continuing its corporate banking activities.

The Fed had announced on July 4 that the U.S. Central Bank, Ziraat Bank and the New York Department of Financial Services (DFS) inked a 20-article deal on June 25 obliging the Turkish lender to submit an “acceptable written plan” against money laundering within two months.

According to information received from the authorities, the lender fulfilled all of the requested tasks before the Aug. 25 deadline and submitted the plan it had prepared along with the name of the auditor it hired.

Turkish Deputy Prime Minister Ali Babacan said on Nov. 7 that the Fed had sent an inspection team to Ziraat New York's branch on Sept. 8 and the inspection was completed on Sept. 26. Babacan stressed that none of the banking activities of the branch was restricted as a result of inspections.

Exactly what triggered the enforcement action is still unknown, with the lender denying that any extraordinary or suspicious acts were discovered. A source, however, told Hürriyet that the bank "struggled to give an explanation to the Fed regarding certain accounts linked to Turkey."Read the full story here.

Related:  Turkish bank money laundering suspicions pose risks to Turkish gov.

For background on the closure of Turkey's Ziraat Bank branch in NYC, see this from @FollowFDD's @MerveTahiroglu http://t.co/EM5c74vbvi

— Jonathan Schanzer (@JSchanzer) November 8, 2014

Foreign Branches & Offices of Ziraat Bank here. You can bet London will have its own probe now. Note Iran branch. http://t.co/o34aSXnQi9

— Jonathan Schanzer (@JSchanzer) November 8, 2014