Governor Andrew M. Cuomo has announced that Bank of Tokyo Mitsubishi-UFJ, Ltd ('BTMU') has agreed to pay $250 million to the New York State Department of Financial Services ('DFS') for violations of New York Banking Law in connection with transactions involving countries and entities subject to international sanctions, including the regimes of Iran, Sudan, and Myanmar.
Between 2002 and 2007, BTMU moved billions of dollars through New York for government and privately owned entities in Iran, Sudan, and Myanmar, and entities on the Specially Designated Nationals (SDN) list issued by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC). BTMU agreed that the conduct at issue involved approximately 28,000 U.S. dollar clearing transactions through New York totaling an estimated $100 billion.
During the period of those violations, BTMU systematically engaged in a practice under which its employees removed information from wire transfer messages that could have been used to identify the involvement of countries and persons subject to international sanctions. In fact, BTMU established written operational instructions on this practice, instructing employees that 'in order to avoid freezing of funds' they should 'omit' information that could have identified the fact that the transactions involved an 'enemy country'.
'The State is providing tough oversight of the financial institutions in New York to protect our economy and communities in the wake of the recent financial crisis', Governor Cuomo said. 'We identified nearly 28,000 illegal transactions totaling $100 billion by BTMU with countries under international sanctions in clear violations of New York State law. Today’s agreement will send a clear message that we are working aggressively to restore and uphold accountability on Wall Street, and those who try to go around the law will be caught'.
Benjamin M. Lawsky, Superintendent of Financial Services, said, 'We have and will continue to take a hard line in rooting out misconduct at banks that threatens our national security. Whenever and wherever we uncover serious wrongdoing, we will take strong enforcement action to protect our country from money laundering, terrorism, and other dangerous misdeeds'.
As part of the agreement, BTMU will make a payment of $250 million to the State of New York. Additionally, BTMU shall install an independent consultant for a term of one year that will report directly to DFS and evaluate risk controls relating to sanctions compliance in the New York branch and the implementation of appropriate corrective measures.
The consultant will be required to abide by the new code of conduct that DFS outlined in a reform agreement that was announced earlier this week. That code of conduct is designed to help ensure the independence and autonomy of the consultant from the bank, and to make explicit that the consultant works for DFS rather than BTMU.
Under the agreement, BTMU will submit written plans for approval to DFS to improve the company’s Bank Secrecy Act/Anti-money Laundering (BSA/AML) related sanctions compliance programs, policies, and procedures, as well as enhance management oversight of those programs. Upon approval of these plans by DFS, BTMU will begin to implement those changes.
Superintendent Lawsky said, 'BTMU took an important step today toward addressing these serious transgressions. It is vital that companies continue to self-report violations and those that do not run the risk of even more severe consequences'.
The bank said that it 'is continually striving to improve its compliance and internal control frameworks and is committed to achieving the highest standards of integrity and regulatory compliance in its business operations'.
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