ALBANY, N.Y. -- Failure to play by the rules is costing a bank $250 million.
The Governor's office announced that Bank of Tokyo-Mitsubishi UFJ will pay a fee of $250 million to the State of New York for violating banking laws. The bank in question was accused of doing business with Iran and other regimes that are on a list of forbidden countries to do business. Currently, there are international sanctions against Iran, Sudan and Myanmar.
Between 2002 and 2007, MTMU moved billions of dollars through New York for both government and privately owned entities in the countries on the sanction list in direct violation of N.Y. banking laws. BTMU agreed that the conduct at issue involved approximately 28,000 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. 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."
In addition to paying the fine, the bank will hire an independent consultant for a term of one year that will report directly to the Department of Financial Services 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 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.
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