By Mike Rapoport
New York banking regulators indicated Monday that they would
indefinitely suspend Promontory Financial Group from some
consulting work because of problems with its anti-money-laundering
compliance work for U.K. bank Standard Chartered PLC.
In a report issued Monday, the New York Department of Financial
Services said Promontory had "exhibited a lack of independent
judgment" in its work for Standard Chartered in 2010 and 2011. In
addition, certain testimony from Promontory witnesses during the
regulator's investigation "lacked credibility," the NYDFS said.
As a result, the department said, it would not approve any
similar work for Promontory "until further notice." Consulting
firms are hired for compliance work for New York-regulated banks
that get into hot water with the NYDFS, but those engagements must
be approved by the department.
A Promontory spokesman did not have any immediate comment.
The New York department has been targeting consultants who
review and help banks with regulatory issues, over concerns that
they could be subject to conflicts of interest because the same
banks whose work they assess also hire and pay them.
The action against Promontory follows settlements over similar
issues between the NYDFS and units of Deloitte LLP and
PricewaterhouseCoopers LLP. Deloitte agreed in 2013 to pay $10
million and accept a one-year ban from consulting for New York
regulated banks over its anti-money-laundering work for Standard
Chartered. PwC agreed in 2014 to pay $25 million and accept a
two-year suspension over its work for Bank of Tokyo-Mitsubishi.
Write to Mike Rapoport at mike.rapoport@wsj.com
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