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Banks will have to scrutinize their relationships with consultants, brace for the possibility of a wave of regulation of consulting practices and have backup plans in case a key advisor ever receives a punishment like the one New York state dealt Deloitte.
June 19
New York regulators announced a $250 million settlement Thursday with Bank of Tokyo Mitsubishi-UFJ (BTMU) for violating United States sanctions against countries including Iran, Sudan and Myanmar.
BTMU, the largest Japanese bank, processed approximately 28,000 transactions totaling an estimated $100 billion for entities under sanction between 2002 and 2007, according to the New York State Department of Financial Services (DFS). In addition to the fine, the bank is required to hire an independent consultant to improve its internal controls.
The settlement marks the second time in recent memory that New York has pursued a major sanctions case, normally the province of the U.S. Treasury's Office of Foreign Assets Control.
New York regulators alleged that BTMU employees systematically removed information from the wire-transfer messages that could be used to identify the involvement of countries under sanction, and issued its employees written instructions to "omit" information that could have identified the fact that the transactions involved an "enemy country," according to the news release.
"We have and will continue to take a hard line in rooting out misconduct at banks that threatens our national security," said Benjamin Lawsky, superintendent of the New York DFS, in the news release. "Whenever and wherever we uncover serious wrongdoing, we will take strong enforcement action to protect our country from money laundering, terrorism, and other dangerous misdeeds."
New York's move significantly upstaged federal regulators, and is likely to be controversial in some corners of Washington. BTMU
New York's settlement targeted a much broader swath of financial activity.
In a statement, BTMU noted that it reported the violations to regulators itself, voluntarily ceased the practices, and is cooperating fully on the matter.
"BTMU is committed to conducting business with the highest levels of integrity and regulatory compliance, and to continually improving its policies and procedures," the company said in an emailed statement.
The bank's consultant will have to adhere to new policies in connection with its
