Accounting firm nailed for whitewashing client's sanctions violations
By Patrick M. Sheridan @CNNMoneyAugust 27, 2014: 3:36 PM ET
NEW YORK (CNNMoney)
An accounting firm that's supposed to help keep banks from breaking the rules ended up breaking the rules itself, improperly altering a document sent to regulators after it was pressured by a banking client.
As a result, PwC, also known as PricewaterhouseCoopers, is being suspended and must pay a $25 million penalty.
The New York Department of Financial Services is prohibiting PwC from doing certain consulting work for banks it regulates for 2 years. In addition to paying the fine, PwC has also agreed to change procedures to make sure the misconduct doesn't happen again.
Regulators say PwC changed the warning language in a report it submitted for its client, Bank of Tokyo Mitsubishi. The language originally pointed out that the Japanese bank had done wire transfers on behalf of countries that face U.S. sanctions, such as Iran and Sudan.
But, after pressure from the bank , the language was whitewashed so it was less likely to trigger red flags with regulators.
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"We are continuing to find examples of improper influence and misconduct in the bank consulting industry," said New York's Superintendent of Financial Services, Benjamin Lawsky, in a statement. "It may well be advisable for us to take a hard look in the mirror and ask whether we are doing enough to root out and investigate this troubling web of conflicts."
PwC's U.S. advisory leader, Miles Everson, in a statement, defended the PwC report submitted to authorities, saying it was "detailed" and that it "disclosed the relevant facts."
"This matter relates to a single engagement completed more than six years ago in which PwC searched for and identified relevant transactions that were self-reported to regulators by PwC's client," Bank of Tokyo Mitsubishi, Everson added.
Monday's announcement follows a similar agreement reached with Deloitte Financial Advisory Services in 2013. The company was suspended from accepting consulting engagements with institutions regulated by the New York bank watchdog.