The Regulatory Advisory Services (RAS) unit of PricewaterhouseCoopers LLP in USA, one of the Big4 accounting firms, has been suspended for two years and fined $25 million by New York State Department of Financial Services. They have been charged with altering and improperly submitting an anti-money laundering compliance report for Bank of Tokyo Mitsubishi.
According to findings, PwC bowed to pressure from bank executives and removed a warning in a 2008 report regarding wire transfers that the bank had performed on behalf of countries which were subject to US economic sanctions at the time.
PwC’s regulatory advisory services unit’s suspension will start immediately and apply to its consulting assignments of New York-regulated banks. . The suspension is considered to be narrow in scope, however it could hurt the firm’s chances to attract new clients for bank-regulation compliance work. It could also cause concern among its existing clientele, even though the suspension and settlement will not prevent them from continuing their work for those clients.
The firm has agreed to implement reforms to its procedures to help address conflicts of interest in the consulting industry, the New York financial regulator added.
PwC had warned in a 2008 draft report that “would have used a different approach” to its review had it known earlier about bank’s policy that removed key information from wire messages, the regulator said.
However, PwC altered the language in the final version of their report which was submitted, stating that its review would not have been affected by the bank’s policy, the regulator added. The regulator alleged that PwC was also guilty of removing other key information from drafts of its report.
PwC has admitted in the settlement agreement with regulators that its work in the said bank “did not demonstrate the necessary objectivity, integrity and autonomy that is now required of consultants” who perform compliance work for banks. Miles Everson, PwC’s advisory business’ head, said in a statement that PwC “disclosed the relevant facts” the firm learned subsequent to its main work and the settlement “relates to a single engagement completed more than six years ago.”
Bank of Tokyo-Mitsubishi was involved in another financial scandal last year when they agreed to pay $250 million to settle allegations that it illegally moved about $100 billion for governments and private entities in countries that are under US economic sanctions. The New York regulator said at the time that the bank reported the activities to regulators and had ceased the practices. A spokesman for the bank declined to comment Monday on PwC’s settlement.