PwC Fined $25 Million for Bank Sanctions ReportGreg Farrell
PricewaterhouseCoopers LLP was fined $25 million after sanitizing a report to regulators on sanctions and money-laundering controls for Bank of Tokyo-Mitsubishi UFJ Ltd., New York’s top bank regulator said today.
The bank persuaded PwC Regulatory Advisory Services to change a compliance report related to financial transactions with sanctioned countries including Iran and Sudan through March 2007, according to a settlement with Benjamin Lawsky, superintendent of New York’s Department of Financial Services.
“When bank executives pressure a consultant to whitewash a supposedly ’objective’ report to regulators – and the consultant goes along with it – that can strike at the very heart of our system of prudential oversight,” Lawsky said in a statement announcing the settlement.
PwC’s Regulatory Advisory Services unit was also banned for two years from accepting some new consulting assignments from firms regulated by Lawsky and must implement changes to address conflicts of interest in consulting. It’s his second suspension of a financial-advisory firm. The Department of Financial Services hit Deloitte LLP’s Financial Advisory Services with a one-year ban in 2013 for work related to Standard Chartered Bank Plc.
“This matter relates to a single engagement completed more than six years ago in which PwC searched for and identified relevant transactions that were self-reported to regulators by PwC’s client,” Miles Everson, the head of PwC’s US advisory unit, said in a statement. “PwC’s detailed report also disclosed the relevant facts that PwC learned subsequent to its search process.”
Bank of Tokyo-Mitsubishi UFJ, part of Mitsubishi UFJ Financial Group Inc., reached a settlement with Lawsky’s department in 2013 and agreed to pay $250 million for violations of U.S. sanctions laws.
PwC was asked in June 2007 to review the bank’s dollar-clearing activity from April 1, 2006, to see whether any should have been blocked or reported under rules by the Treasury Department’s Office of Financial Asset Control. PwC edited the report at the bank’s request “in ways that omitted or downplayed issues of material regulatory concern,” including cutting out English translations for instructions to strip references to “doing business with ‘enemy countries’ of the U.S.,” according to the settlement.
The Historical Transaction Review report was finished in June 2008 and filed to U.S. regulators and became the “cornerstone” for the 2013 deal with Bank of Tokyo-Mitsubishi, according to the accord with PwC. The two partners responsible for supervising the review have retired from PwC.