By Karen Freifeld
NEW YORK, June 20 The Bank of Tokyo-Mitsubishi
UFJ has agreed to pay New York state $250 million for deleting
information from $100 billion in wire transfers that authorities
could have used to police transactions with sanctioned countries
The settlement, announced on Thursday, is the latest example
of New York state's chief financial regulator, Benjamin Lawsky,
flexing the agency's muscle. Lawsky extracted a much bigger sum
than the U.S. Treasury Department, which settled with the bank
over sanctions violations in December 2012 for $8.57 million.
Lawsky has gone his own way before, drawing criticism from
other regulators. Last year, when a group of government
authorities were investigating Standard Chartered Plc,
the New York regulator threatened to revoke the bank's state
license, and stopped working with other agencies.
In August, Standard Chartered agreed to pay the state $340
million over transactions linked to Iran and other countries.
Four months later, the bank settled with other agencies for $327
At issue with Bank of Tokyo-Mitsubishi UFJ were 28,000
transactions the bank processed through New York between 2002
and 2007, according to a statement from New York Governor Andrew
For most of the transactions, Bank of Tokyo-Mitsubishi was
not breaking sanctions rules. It was entering transactions known
as "u-turns" that were legal from 1995 through 2008. In those
transactions, an Iranian company or individual could send or
receive dollar payments, but only if it used a nonsanctioned
bank as its agent. Those payments would come from overseas, be
processed in the United States, and then go back abroad.
Lawsky objected to the way Bank of Tokyo-Mitsubishi UFJ
handled records for the transactions. Wire transfer systems flag
transactions linked to sanctioned countries for further review.
Bank of Tokyo-Mitsubishi UFJ stripped information from
transfers, the statement said, to speed their processing. That
stripping violated New York banking laws for record-keeping.
The bank's written materials instructed employees on how to
delete or omit wire transfer information, according to the
The bank, owned by Mitsubishi UFJ Financial Group Inc
, said in a statement it reported the stripping
on its own to authorities in 2007, and promptly stopped deleting
or omitting information. It also said it has cooperated with
In December, Bank of Tokyo-Mitsubishi UFJ settled with the
U.S. Treasury Department's Office of Foreign Assets Control
(OFAC), which oversees sanctions violations. The bank agreed to
pay $8.57 million for processing about 100 fund transfers in
2006 and 2007 that allegedly broke federal sanctions laws.
A Treasury spokesman said the department focused only on
transactions that were apparent violations of federal sanctions
The Federal Reserve, which regulates Bank of
Tokyo-Mitsubishi UFJ, supported OFAC's $8.5 million penalty last
year and worked with the bank and other regulators to be sure
the compliance program was fixed, a Fed spokesman said.
Other banks have settled with authorities for violating laws
related to sanctions. After settling with New York in August,
Standard Chartered agreed to pay $327 million in a separate deal
with other U.S. agencies to resolve similar accusations in
HSBC Holdings Plc agreed to pay $1.9 billion in a
deferred prosecution agreement with the U.S. Justice Department
in December over sanctions violations.
In the New York settlement, Bank of Tokyo-Mitsubishi UFJ
agreed to hire an independent consultant for a year to evaluate
risk controls relating to compliance in the New York branch and
report to the state.
The New York Department of Financial Services has also been
scrutinizing independent consultants. On Tuesday, the agency
said that Deloitte LLP's financial advisory unit will pay $10
million and refrain from new business with certain New York
banks for a year.
The deal resolved accusations that Deloitte Financial
Advisory Services omitted key information in a report to
regulators after reviewing Standard Chartered's operations. The
state said it found no evidence that Deloitte intentionally
helped or conspired with the bank to launder money.
Deloitte also agreed to reforms designed to end potential
conflicts of interest. Lawsky said the independent consultant
for Bank of Tokyo will have to agree to abide by those reforms.