PriceWaterhouseCoopers to pay USD 25M in bank case

PriceWaterhouseCoopers will pay USD 25 million and face a two-year suspension from consulting for new bank clients under an agreement with New York regulators following an investigation that showed the company improperly altered a report about Bank of Tokyo Mitsubishi laundering money.
Today's agreement followed a USD 250 million settlement between the bank and the same regulators last year.
New York's Department of Financial Services said its investigation showed PriceWaterhouseCoopers, under pressure from bank executives, improperly altered a report to regulators on bank wire transfers on behalf of Iran, Sudan and other countries under US sanctions.
"We are continuing to find examples of improper influence and misconduct in the bank consulting industry," department Superintendent Ben Lawsky said. "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."

Miles Everson, US advisory leader for
PriceWaterhouseCoopers, said the agreement related to a single engagement completed more than six years ago in which the company searched for and identified transactions that were self-reported by the bank to regulators. Its detailed report "disclosed the relevant facts" that it learned, he said.

The resolution of the case reinforces
PriceWaterhouseCoopers' commitment to meeting changes in regulatory expectations, he said.
The department said PriceWaterhouseCoopers reviewed the Tokyo bank's dollar-clearing activity and transactions that potentially should have been blocked. The company found the bank had issued special instructions to employees to strip out wire messages that would have triggered alerts, the department said. The bank had denied having such a policy only weeks earlier when meeting with regulators.

The consultant revised its draft report to delete the English translation of the bank's wire-stripping instructions and other information about it, according to the department.
Versions of the report "were progressively sanitized based on changes demanded by the bank," the department said. Two PriceWaterhouseCoopers partners responsible for supervising the report are now retired.
The USD 25 million represents an approximation of the fees and expenses the company received for the report plus the department's investigation cost.
The regulators also noted that PriceWaterhouseCoopers withheld more than 20 percent of one director's compensation after it came to light the director repeatedly had suggested the company stop conducting further analysis that might show bank wrongdoing. The director, presently a partner, was quoted in the settlement agreement signed today but was not named.

The deal requires PriceWaterhouseCoopers within a year to establish procedures that include requiring the consultant and its bank clients to submit work plans to New York regulators and that the banks consent to independent contact between the consultant and regulators.