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PwC Faces Suspension, Fine From New York Regulator

The New York State Department of Financial Services conducted an investigation into PwC's regulatory advisory services arm involving work it did for Bank of Tokyo Mitsubishi.

PricewaterhouseCoopers (PwC) Regulatory Advisory Services will be suspended for 24 months from accepting consulting engagements at financial institutions regulated by the New York State Department of Financial Services, the agency announced today.

New York superintendent of financial services, Benjamin Lawsky, also announced that PwC must "make a $25 million payment to the State of New York; and implement a series of reforms after improperly altering a report submitted to regulators regarding sanctions and anti-money laundering compliance at Bank of Tokyo Mitsubishi (BTMU)." These sanctions come after a year-long investigation by the agency.

According to the agency, PwC, under pressure from BTMU executives, removed a warning in a report to regulators surrounding the bank's scheme to falsify wire transfer information for Iran, Sudan, and other sanctioned entities. The agency says PwC altered a historical transaction review (HTR) report submitted to regulators on wire transfers. PwC found that BTMU had issued special instructions to bank employees to strip wire messages of information that would have triggered sanctions compliance alerts -- after the bank denied having such a policy only weeks before in a meeting with regulators, the investigation found.

Per the agency's investigation:

PwC understood that this improper data manipulation could significantly compromise the HTR’s integrity and PwC inserted into an earlier draft of the report an express acknowledgement informing regulators that "had PwC know[n] about these special instructions at the initial Phase of the HTR then we would have used a different approach in completing this project"...

However, at the Bank’s request, PwC ultimately removed the original warning language from the final HTR Report the Bank submitted to regulators and, in fact, inserted a passage stating the exact opposite conclusion.

As part of an agreement with the Department of Financial Services, during its suspension PwC will work to implement a series of reforms to help address conflicts of interest in the consulting industry. The reform agreement can be viewed here.

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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