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NY regulators fault Deloitte’s bank consulting

June 18, 2013

ALBANY, N.Y. (AP) — New York regulators reached an agreement Tuesday for Deloitte Financial Advisory Services to pay $10 million and cease new consulting for one year at state-regulated banks to settle an investigation into misconduct.

The probe involved Deloitte’s work for the New York branch of Standard Chartered Bank in 2004 and 2005.

The company said it entered the agreement voluntarily and will work with the state’s regulators to establish practices intended to become the standard in New York. It concerns Financial Advisory Services, not other Deloitte entities, spokeswoman Shelley Pfaendler said.

According to the agreement, signed Tuesday by Deloitte Financial chief executive David S. Williams and state Department of Financial Services Superintendent Benjamin Lawsky, the company violated state banking law and its own policies by sharing with Standard Chartered confidential information from other client banks in two reports. Investigators said they found no evidence the consultant helped the bank illegally launder money, though they said Deloitte failed to show autonomy and objectivity.

The British bank agreed last year to pay $340 million to settle New York allegations that it processed billions of U.S. dollar transactions for Iranian interests, despite U.S. economic sanctions against Iran.

Tuesday’s agreement criticized Deloitte Financial for revising a draft report on the bank’s transactions and removing, because of the bank’s objection, an explanation how certain wire messages could be manipulated to evade money-laundering controls and suggesting that those be ended or restricted.

“When tasked by government agencies to undertake regulatory work at financial institutions, it is critical for these consultants to remain autonomous and avoid conflicts of interest,” Gov Andrew Cuomo said in a prepared statement. “Our homeowners, investors and economy are protected when independent consultants are truly ‘independent.’”

An attachment described best practices for firms retained as independent consultants or under consent orders or regulatory agreements with the department. They include disclosure of any work for the bank within the previous three years, specifying the consultant will use independent judgment, a record of all recommendations the bank rejects and stating that the consultant and regulators can separately share information.

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