Friday, November 21, 2014

Mitsubishi Fined $315m For Improper Transactions

A pedestrian walks past signboards of Bank of Tokyo-Mitsubishi UFJ (R) and Mizuho Bank in Tokyo May 14, 2014. REUTERS/Yuya Shino
A pedestrian walks past signboards of Bank of Tokyo-Mitsubishi UFJ (R) and Mizuho Bank in Tokyo May 14, 2014. CREDIT: REUTERS/YUYA SHINO
Bank of Tokyo-Mitsubishi UFJ has agreed to pay $315 million to New York's banking regulator for submitting a whitewashed report about its improper handling of transactions involving countries subject to U.S. sanctions, the regulator said on Tuesday.

The report formed the basis for a $250 million settlement the bank reached last year with New York's Department of Financial Services (DFS) for stripping information from wires that would have helped authorities police transactions involving Iran, Burma and Myanmar from 2002 to 2007.

The bank "misled" the department in reaching the 2013 settlement, with key information deleted from a supposedly objective report, according to a consent order signed Tuesday by DFS superintendent Benjamin Lawsky and bank president Nobuyuki Hirano.

As part of the latest accord, the bank, the largest in Japan, will move its U.S. sanctions compliance and anti-money laundering operations to New York, the department said in a statement.

Several bank executives also were targeted for discipline, one of whom resigned under pressure, the regulator said.

PricewaterhouseCoopers (PwC), which produced the 2008 report for the bank, agreed in August to pay $25 million and refrain from certain work in New York for two years after the regulator accused the consulting firm of altering its findings under pressure from bank lawyers and executives.

A Bank of Tokyo-Mitsubishi statement on Tuesday said the bank settled "to resolve issues relating to instructions" given to PwC and "disclosures made" to the New York regulator in connection with its voluntary investigation.

The bank said it was committed to doing business with "the highest levels of integrity and regulatory compliance."

The bank's compliance manager, Tetsuro Anan, resigned after the regulator demanded his firing, New York’s Department of Financial Services, said. Anan asked PwC to remove key information about the bank's misconduct from the report, the regulator said.

Two former compliance executives, who now work at bank affiliates, will be banned from doing business with any New York banks regulated by the Department of Financial Services, the agency said.

The executives are Akira Kamiya, deputy president of Mitsubishi UFJ Securities Holdings and Tetsuji Kamisawa, executive deputy president of the Defined Contribution Plan Consulting of Japan.

The executives could not immediately be reached for comment.

Bank of Tokyo-Mitsubishi (BTMU) is the core banking unit of Mitsubishi UFJ Financial Group.

The 2013 settlement was based on estimates the bank had improperly processed 28,000 transactions, worth some $100 billion, through New York between 2002 and 2007 on behalf of countries sanctioned by the U.S.

However, those numbers were extrapolated from the 2008 report that the regulator found was watered down.

In August, when PwC settled, one of its executives said it had identified relevant transactions and disclosed the relevant facts that it learned subsequent to its search process.

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