Aug 28

Recent Development

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The New York Department of Financial Services (NYDFS) announced yet another large settlement. In this case, NYDFS claimed that a consulting firm, PricewaterHouseCoopers (PwC), watered down its independent report at the request of its client, Bank of Tokyo Mitsubishi.

PwC was fined $25 million and is barred for two years from representing any new clients that require NYDFS to sign off on the assignment. Previously, Bank of Tokyo Mitsubishi was fined $250 million by NYDFS for the underlying charges of falsifying information pertaining to the issuance of 28,000 transactions for U.S. sanctioned countries, including Iran, Sudan and Burma.

NYDFS claimed that PwC became aware of this information, reported it in its initial draft report, but, at the request of the bank, changed the report so that this information was not evident.

This case follows a similar case from last year in which NYDFS fined another large consulting firm, Deloitte, contending that the firm did not fully disclosing possibly poor money laundering controls at Standard Chartered Bank. Deloitte was fined $10 million and prohibited from taking on new clients regulated by NYDFS for one year.

Standard Chartered Bank was fined $340 million. The Superintendent of NYDFS, Benjamin Lawsky, is quoted as saying, “We are continuing to find examples of improper influence and misconduct in the bank consulting industry.

He also indicated that additional investigations are on-going. This case serves to underscore the need for banks to carefully review and report any and all Bank Secrecy Act-related deficiencies and to have strong, independent consultants to advise them.


Author: Bob Pasley