UK’s PRA fines Japanese banking group for withholding information

The UK's Prudential Regulation Authority has hit Mitsubishi UFJ Financial Group with fines after parts of the bank fell "significantly short" of regulators' expectations.

In a release published today (February 9), the PRA said it had imposed a fine of £17.9 million ($22.4 million) on Bank of Tokyo-Mitsubishi UFJ after the entity failed to inform the UK regulator of action being taken against it by the New York Department of Financial Services.

Bank of Tokyo-Mitsubishi UFJ, and its sister organisation, MUFG Securities EMEA, "did not inform the PRA of the DFS action until after the DFS' public announcement", the statement said.

In November 2014, Bank of Tokyo-Mitsubishi UFJ, or BTMU, was fined $315 million for pressuring a consultant at PwC to "water down" a "supposedly objective report" on the bank's dealings with Iran, Sudan and Myanmar, countries sanctioned by the US.

The report was subsequently submitted to the DFS, "misleading" the US regulator. The bank was forced to pay the fine on top of a $250 million penalty it paid under a previous June 2013 DFS agreement over its sanctioned transactions.

BTMU's Tetsuro Anan, manager for the anti-money laundering compliance office and compliance division, was forced to resign.

The DFS enforcement action also "had implications" for the then chair of MUFG Securities EMEA, Kiyoshi Sono, the statement said, leading the PRA to fine the institution £8.9 million today.

"We expect all firms to be open and straightforward in their dealings with the PRA. Where firms fall short of this expectation, we will enforce it," said Sam Woods, deputy governor at the Bank of England and chief executive of the PRA.

Both BTMU and MUFG Securities EMEA agreed to settle with the regulator at an early stage in the process and were thus entitled to a 30% reduction in their fines, down from £25.5 million and £12.8 million, respectively.

In the statement, the UK regulator said both firms had fallen "significantly short" of the PRA's expectations of authorised firms, placing the blame on BTMU's "inadequate systems and controls", which should have led it to communicate the relevant information to the regulator.

Under the PRA's supervisory approach, firms are meant to engage in an "open dialogue" with the regulator; this includes "taking the initiative" to ensure the PRA has all relevant information at an "early stage", even if the firm operates across jurisdictions.

Following on from the incident in 2014, both firms have taken action in improving their information-sharing frameworks relating to regulatory investigations, the PRA said.

The regulator also stressed both BTMU and MUFG Securities EMEA had "co-operated fully" throughout the incident.