Bank of Tokyo to pay New York $315m over sanctions

NEW YORK (REUTERS) - The Bank of Tokyo-Mitsubishi UFJ has agreed to pay New York state US$250 million (S$315 million) for deleting information from US$100 billion in wire transfers that authorities could have used to police transactions with sanctioned countries like Iran.

Bank of Tokyo-Mitsubishi UFJ moved 28,000 transactions through New York between 2002 and 2007 that were for countries including Iran, Sudan and Myanmar, or entities linked to them, according to a statement from New York Governor Andrew Cuomo.

The settlement, announced on Thursday, is the latest example of New York state's chief financial regulator, Benjamin Lawsky, flexing the agency's muscles.

Last year, Standard Chartered Plc agreed to pay the state US$340 million over transactions linked to Iran and other countries. In that case, Lawsky settled, refusing to continue working with other United States (US) regulators investigating the bank.

Wire transfer systems automatically flag transactions linked to sanctioned countries for further review, but the bank stripped information from transfers, the statement said.

Bank of Tokyo-Mitsubishi UFJ's written materials instructed employees on how to delete or omit information, according to the statement.

The bank, owned by Mitsubishi UFJ Financial Group Inc , said in a statement it discovered the actions on its own in 2007, reported them to authorities, and promptly stopped stripping information from wire transfers. It also said it cooperated with regulators.

Bank of Tokyo-Mitsubishi UFJ is the latest company to settle with authorities for violating laws linked to sanctions.

Standard Chartered settled with New York, and in a separate deal with other US agencies agreed to pay US$327 million to settle similar charges.

HSBC Holdings Plc agreed to pay US$1.9 billion in a deferred prosecution agreement with the US Justice Department in December over sanctions violations.

Also, in December, Bank of Tokyo-Mitsubishi settled with the US Treasury Department's Office of Foreign Assets Control, which oversees sanctions violations. The bank agreed to pay US$8.57 million.

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 US$10 million and refrain from new business with certain New York banks for a year.

The deal settled 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.

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