28 November 2015

PwC fined $25m for whitewashing bank's sanctions violations

19 August 2014  |  5507 views  |  0 Numbers

PricewaterhouseCoopers has been fined $25 million by New York State's financial watchdog after it sanitised a report for regulators into anti-money laundering at Bank of Tokyo-Mitsubishi UFJ (BTMU).

In addition to the fine, PwC's regulatory consultancy business has also been banned for two years from working for banks regulated by the New York State Department of Financial Services (NYDFS).


According to the NYDFS, under pressure from the BTMU, PwC removed a warning from what was supposed to be an objective report into how the Japanese bank falsified wire transfer data for Iran, Sudan and others.


During its review, carried out between 2007 and 2008, PwC found that BTMU had been telling employees to strip wire messages of information that would have triggered sanctions compliance alerts - a fact the bank had denied to regulators.


PwC initially put its findings in its report to regulators but removed them, under pressure from BTMU, and made several other alterations before submitting its final "sanitised" document.


The NYDFS has published parts of emails sent by a PwC director who led the firm's technology and data collection team at the time, which among other things, argue that to "raise an issue of data completeness at this point does not do anyone, especially the bank, any good".


Benjamin Lawsky, superintendent, financial services, New York State, says: "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."

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