The US$3.7 billion purchase by M&T Bank Corp. of smaller institution Hudson City Bancorp Inc. may be delayed a bit further as there are concerns by the Federal Reserve of allegations of money laundering at the former bank. 

To clarify the issue, the two banks issued a statement that they are to extend the date of the purchase. When such date passes without resolution, then either party may opt out of the deal. The new deadline is August 27, 2014 from the previous deadline of January 31, 2014.

M&T Bank has engaged the services of an external consultant to help in addressing the concerns raised by the Federal Reserve regulators. There was no indication on who the consultant would be. The concerns relate to the procedures the bank has undertaken related to the Bank Secrecy Act. 

The shareholders of the banks would be meeting next week to vote on the merger according to the companies.