PRA fines BTMU firms for failure to be open with it

PRA has fined the Bank of Tokyo-Mitsubishi UFJ Limited £17.95m and MUFJ Securities EMEA plc £8.925m. The fine relates to a failure of the firms to be open and honest with PRA in respect of a US enforcement action, in breach of Fundamental Rules 6 and 7 in the case of BTMU and Fundamental Rule 7 in the case of MUFJ Securities. The New York Department of Financial Services had fined BTMU $315m for putting pressure on its consultant to “water down” what was supposed to be an objective report on the bank’s dealings with sanctioned countries, which was to be submitted to the DFS. The report would have suggested that BTMU has established written procedures requiring staff to strip the origin of transactions that would breach US sanctions. As a result, the regulator was misled and imposed the fine (having previously fined BTMU $250m for improper processing of dollar clearing activity, and the consultant $25m although it recognised the report had been changed following improper pressure from BTMU). The matter impacted on MUFJ Securities, whose then Chair and NED was one of three individuals whose employment BTMU agreed to restrict as part of the US settlement. The firms did not inform PRA about the action or the fine until the fine was publicly announced. Neither did they inform PRA about the implications for the individual senior manager until the DFS published a settlement notice. The failure was in part due to inadequate systems and controls for communicating relevant information, and in part due to BTMU not wishing to breach the confidentiality restrictions the DFS had imposed. In imposing the fine, PRA noted that it expects firms to be organised so that they consider their regulatory responsibilities as a whole where they operate across jurisdictions, and events on one jurisdiction may impact on others. It also noted that senior managers who have a role in more than one member of a group must also consider their responsibilities to each relevant firm.

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