The New York State Department of Financial Services entered into a settlement with The Bank of Tokyo-Mitsubishi UFJ, Ltd., claiming that the bank misled it regarding its US dollar NY-based clearing services on behalf of US-sanctioned Sudanese, Iranian and Burmese parties from 2002 through 2007. The Department previously entered into a settlement with the bank related to these clearing services that required the bank to pay a fine of US $250 million and agree to other sanctions. In entering into this settlement, the Department relied on a report prepared by PricewaterhouseCoopers LLP that had been commissioned by the bank. However, the Department subsequently investigated PwC’s work and concluded that the bank “successfully convinced” the PwC engagement team to remove from its report certain adverse information about the bank. As a result, PwC was fined US $25 million by the Department and suspended from accepting certain consulting engagements at financial institutions overseen by the Department for a period of time. To resolve this current matter, the bank agreed to pay an additional fine of US $315 million, implement certain disciplinary measures against certain employees (including the former general manager of the bank’s anti-money laundering, compliance and legal division), and other sanctions. (Click here for more information on this matter in the article “Accounting Firm Sanctioned for Allegedly Removing Adverse Information From Report Filed With Regulator Regarding Client’s Non-Compliance With AML Requirements” in the August 18-29 and September 2, 2014 edition of Bridging the Weeks.)

My View: My view hasn’t changed as I expressed it in a prior related article on this development: “With all respect to Shakespeare, ‘to include or not to include’ is really the important question these days for many professionals advising financial service firms or working within such entities in compliance or other control functions. Outside advisers engaged to issue reports to management regarding conduct that might be contrary to law, or internal staff required to author annual compliance or other control-oriented reports, must struggle between what they see, hear, and conclude, and how they write it, and the views of some management that may want a different emphasis in an official publication. These different perceptions can lead to tough discussions. In the end, however, a firm with a strong compliance culture will not seek to avoid accurate descriptions of facts being included in official documents no matter how embarrassing or how adverse the consequences of such disclosure may be.”