AML BULLETINRegulatory News Update from DLA Piper

AUTUMN 2014

02 | AML Bulletin

CONTENTS

UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04

News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04

UK Court Proceedings and Enforcement Action . . . . . . . . . . 08

International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

International Enforcement Action . . . . . . . . . . . . . . . . . . . . . . 15

Key Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

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IntroductionDLA Piper’s Financial Services Regulatory Team welcomes you to the Autumn 2014 edition of our Anti-Money Laundering Bulletin .

In this issue, we look at Standard Chartered Bank’s $300 million fine from New York regulators for failures in suspicious activity reporting . We also provide an update on the setting up of a new central public registry showing beneficial ownership of companies in the UK and the new UK requirements relating to suspicious activity reports .

We hope that you find this update useful . Your feedback is important to us so if you have any comments or would like further information, please contact one of our specialists detailed at the end of the bulletin .

04 | AML Bulletin

UK

GOVERNMENT TO INTRODUCE CENTRAL PUBLIC REGISTER TO COUNTER MONEY LAUNDERINGThe details for a public register on companies’ beneficial ownership have been outlined in a government response published by the Department for Business, Innovation and Skills (“BIS”). The response builds on ideas in the 2013 discussion paper, which consulted on a number of methods for maintaining transparency and accountability in the UK financial system.

The register will list individuals who own or control more than 25% of either the company shares or voting rights; or persons who exercise control over the way in which the company is run. The obligation will rest with companies and limited liability partnerships to identify their beneficial owners. Firms will be subject to a requirement to investigate further should they know, or have reasonable cause to believe, that there are any further beneficial owners. To enforce this, new investigative powers will be statutorily granted to firms, which will seek to replicate the existing statutory tools available to public companies. Individuals with a beneficial interest will be required to disclose this interest to a company, replicating the existing powers for listed company shareholders.

Companies will be required to keep and maintain a register of beneficial owners, including information identifying the owner of the interest (name, date of birth, nationality, country of residence, residential address), a means of correspondence (service address) and the

details of their beneficial interest (date on which the beneficial interest was acquired, details of the interest, details of how the interest is held). This register must be updated when appropriate and must be, with the exception of any residential address information, made available to the public.

The response paper indicates that the government intends to extend the existing company criminal law offences for breaches of the new requirements.

Additional measures announced in the paper include the phasing out of existing and prohibition on issuing new bearer shares; a general prohibition on corporate directors (albeit with specific high-value, low-risk exceptions); an emphasis on cutting “front” or “nominee” directors; and a number of updates to the Company Directors Disqualification Act 1986 (“CDDA”), such as lengthening the period during which proceedings can be brought from two to three years from the earliest insolvency event and expanding the definition of what can be considered when determining whether a director is unfit to act to include the materiality of any conduct and misconduct overseas.

A statutorily mandated review of the “efficacy and proportionality” of the new system will be conducted by the Secretary of State for BIS within the first three years following implementation.

NEWS

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The measures are significantly broader than the European Commission’s proposed amendments to the Shareholder Rights Directive (2007/36/EC) to require intermediary companies to provide the name and address of shareholders at a company’s request. Whilst both regimes seek to increase the transparency and accountability of firms, it has been argued that the purpose of the new UK register being made available to the public is to target promoting general investor and consumer transparency and accountability rather than confidence in intermediary suppliers of particular companies.

The UK Prime Minister David Cameron originally announced the central public register at the Lough Erne G8 Conference as a part of the UK’s G8 Action Plan.

In a speech, David Cameron stated “We need to know who really owns and controls our companies. Not just who owns them legally, but who really benefits financially from their existence. This summer at the G8 we committed to do just that – to establish a central register of company beneficial ownership.”

The World Bank Group Vice-President Sanjay Pradhan said: “corporate transparency is essential to reduce tax evasion, eliminate corruption and ensure citizens get the services they deserve. We applaud the UK’s leadership and encourage other countries to take actions toward a similar outcome.”

The new register will be particularly useful for Know Your Customer (KYC) checks in relation to UK company ownership.

06 | AML Bulletin

NCA ALTERS CONSENT REQUIREMENT FOR SUSPICIOUS ACTIVITY REPORTSThe National Crime Agency (“NCA”) announced that from 1 October 2014, no further action will be taken on any suspicious activity report (“SAR”) submitted to the agency, and any file will be closed, if the individual making the report fails to outline the reasons for suspicion or to include a statement regarding criminal property.

The NCA have implemented the current change in policy in response to the increasing number of consent requests being received, combined with a decline “in basic quality” of the reports. This includes failings such as not providing:

■ a reason for believing that the information provided gives rise to a suspicion of money laundering;

■ a description of what constitutes the criminal property being reported;

■ a description of the prohibited act;

■ the identity of the persons believed to be involved, if these are known or suspected; or

■ the present location of any suspected criminal property.

The report notes that this has resulted in longer turnaround times for consent requirements, which is detrimental to both businesses and law enforcement agencies. The NCA is statutorily required to process all consent requests within a seven day period and delays resulting from inadequate reports or missing information have caused strain on the agency in meeting this deadline.

As a result of changes to the procedure, any reporter whose case is closed due to inadequate reasons for suspicion or a lack of statement regarding criminal property will receive a letter from the UK Financial Intelligence Unit (“UKFIU”), which is run by the NCA, explaining what information is missing and that the case has been closed as a result.

If the activity which resulted in the original report still gives rise to suspicion, the reporter continues to have a legal duty under the Proceeds of Crime Act 2002 (“POCA”) to seek consent before the prohibited act can take place. Failure to report an activity which could be suspicious would also be considered to be a breach of POCA in relation to their money laundering duties.

A person found to be concerned with an arrangement which involves criminal proceeds without making an authorised disclosure to, and receiving subsequent consent from, the NCA (the s328 POCA offence) can face a maximum prison sentence of fourteen years. Failure to disclose a suspicious activity (the s330 POCA offence) also carries a maximum sentence of five years in prison.

The NCA, which became operational in October 2013, is responsible for addressing serious and organised crime. As part of this role, it is responsible for receiving SARs and reporting the required information to the UKFIU database for sharing among law enforcement agencies.

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FCA EMPHASISES MONEY LAUNDERING CONCERNS ARISING FROM UKRAINE CRISISThe Financial Conduct Authority (“FCA”), the UK’s financial regulator, has launched a web page in which it has re-emphasised the importance of maintaining adequate systems and controls for money laundering in light of the developments in the Ukraine crisis. The page deals with both the ongoing situation in Ukraine and the subsequent sanctions imposed on Russia in July 2014.

The FCA has issued a reminder on the page that firms should be aware when they are, or may potentially be, dealing with politically exposed persons and to also remain vigilant for any unusual cross-border financial transactions which may lead to suspicions of money laundering.

The FCA stated “we expect firms to establish and maintain systems and controls to counter the risk they might be used to further financial crime. Firms must also comply with their legal obligations under the POCA and the Money Laundering Regulations 2007 (“MLR”).”

Regulation 14(4) of the MLR states that a person proposing to establish a business relationship either with, or with the immediate family or associates of, a politically exposed person (defined in regulation 14(5) to include persons who have held a prominent public function in a foreign country within the last year) must have senior management consent, take adequate steps to establish the source of the wealth and conduct on-going monitoring of the relationship. Regulation 20(2) of the MLR also outlines the kind of policies and procedures a firm must have in place to prevent activities related to money laundering.

The FCA have also indicated their expectations arising as a result of certain sanctions imposed on 31 July 2014 in relation to the conflict between Ukraine and Russia. The FCA do not expect to admit any securities to listing issued after 1 August 2014 by firms covered by the sanction. Furthermore, it expects depositaries for global depositary receipt issuers within the purview of the regulation not to issue any new receipts.

08 | AML Bulletin

UK COURT PROCEEDINGS AND ENFORCEMENT ACTION

UK CENTRE OF £12.5 BILLION MONEY LAUNDERING INVESTIGATIONFront companies in the UK are being investigated for having played a part in a money laundering operation to conceal the origins of £12.5 billion of criminal proceeds, believed to have been acquired from criminals and corrupt officials in Russia.

An investigation conducted by The Independent newspaper and the Organised Crime and Corruption Reporting Project (a non-governmental organisation focussed on exposing criminal behaviour in Eastern Europe and Russia) has found that at least 19 UK front companies are under suspicion for helping to channel money from criminals in Russia in order to make the money appear clean within European jurisdictions. The scheme was believed to have been active for four years until investigators in Moldova brought it to a stop in May 2014.

The scheme operated through front companies set up in the UK. These companies would conduct fictitious business deals between one another and then sue each other for millions of pounds in the courts of Eastern European nations such as Moldova. The money would be transferred pursuant to a court order from funds routed through Russia into the claimant’s Moldova-based court account. The money would then be transferred into an account in Latvia, a country considered to have a highly regulated banking system. At this point, the money would be considered clean and ready to re-integrate to the economy.

Money launderers were able to move these cases to jurisdictions with less developed legal systems, including Moldova, through the use of co-guarantors both in the relevant jurisdiction and also with Russian companies

(who could help channel the money). The co-guarantors were paid small amounts of money for their role in the process. In one instance, the investigation claims that an individual was a shareholder and director in a businesses which paid a British front company $500 million in a court order despite the individual, in reality, being unable to afford his own car.

Courts in Moldova issued court orders totalling over £12.5 billion, which represents a figure twice the size of the entire Moldovan gross domestic product. Police in Moldova have begun looking at the legal system itself and will consider measures to pursue judges and prosecutors found to have committed wrongdoing.

Vasile Sarco, chief investigator in Moldova’s money laundering prevention unit, stated that “this money was routed from Russia, but the companies incorporated in Britain were instrumental to the transit of funds”.

“We hope our colleagues [at the NCA] will uncover what activity took place in the UK, but our main difficulty is that the relevant authorities in the Russian Federation are being less co-operative.”

Mr Sarco has said he is close to arresting “four or five” bankers in connection with the case.

Police in Moldova have further alleged that Millfield School, an independent school for 3-18 year olds, is one of a number of legitimate sources that received money as a result of the laundering operation. It is alleged that Millfield, along with over a dozen other bona fide companies, received money from companies connected to the alleged laundering operation.

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The school, based in Somerset, said in a statement “we do not have any detail of the alleged transactions and are not aware of having received any suspicious payments. Millfield is not part of the regulated sector under the MLR but is aware of its obligations under the POCA.”

Transparency International, an NGO which monitors and reports on money laundering, highlights key concerns with independent schools and universities. Robert Barringdon, its executive director, said

“independent schools’ income from foreign students has greatly increased in the last decade. Schools may not be expected to know which are legitimate bank accounts, but some of their pupils come from parts of the world with high levels of corruption”. As an example of the problem, he cites James Ibori, a Nigerian state governor sentenced to 13 years in jail for fraud, who sent his children to private school.

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COURT OF APPEAL CLARIFIES POCA JURISDICTIONAL APPROACH TO UK ACTIVITIESThe Court of Appeal has clarified its approach in examining what would be considered to be within the UK’s jurisdictional scope under POCA.

In its ruling in R v Rogers [2014] EWCA Crim 1680, it stated that the Crown Court had correctly claimed jurisdiction to rule on the charge of converting criminal property under POCA even though all the alleged activities were undertaken in Spain, by a non-UK resident, in a Spanish bank account.

Bradley Rogers (the appellant) had been convicted by the Crown Court for converting criminal property under POCA in relation to his participation in a fraud scheme encouraging UK consumers to pay advance fees or deposits for services which were never provided. Mr Rogers was found by the Crown Court to have permitted receipt of the monies obtained through the scheme, which amounted to £715,000, into his Spanish bank account and then permitting its subsequent withdrawal.

When asked to consider if the Crown Court had been incorrect in accepting jurisdiction, the Court of Appeal held that the actions of defrauding UK customers had taken place in the UK, and even though the proceeds were laundered in Spain, the laundering was directly linked to the criminal acts in the UK because the money was criminal property.

In its judgement, the Court of Appeal stated “when the significant part of the criminality underlying the case took place in England, including the continued deprivation of the victims of their monies, there is no reasonable basis for withholding jurisdiction”.

The appellant had originally been charged in the Crown Court with money laundering through removing the money from the UK, which was criminal property obtained by fraud, although this had been converted to a charge of converting criminal property, after the Crown Court had accepted a plea of no case to answer to the original laundering charge.

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MONEY LAUNDERER ORDERED TO REPAY PROCEEDS OR FACE FURTHER JAIL TIMEShafiq Ahmed, a convicted money launderer, has been ordered to pay back £1.12 million in assets identified by the NCA within the next six months or he will face further time being added to his jail sentence.

In the hearing at Blackfriars Crown Court on 23 October 2014, the NCA stated that they had identified £1.12 million of assets, on top of the £300,000 in cash already seized in the original investigation. The court ordered that this money be paid to regulators in the next six months or Mr Ahmed would face a further six years in custody. Should he fail to pay the money within the required time period, Mr Ahmed would still be under an obligation to pay the money.

In June 2013, Mr Ahmed was jailed for eight years, following a conviction for laundering over £5 million through his Tooting-based business. The business would

deposit money in UK bank accounts before immediately wiring the money overseas. Four other men were also convicted for their involvement in the scam.

The money, which predominantly originated in the profits from drug trafficking deals, was sent to accounts in Pakistan, Afghanistan and the Far East. Mr Ahmed sought to obscure the source of the monies by forging and falsifying paperwork.

Branch Commander of the NCA, Oliver Higgins, stated “our investigations do not end when a criminal is put in jail. Money is at the heart of all organised crime and is the motivation for most criminals, so we are determined to take their profits off them. The clock is ticking for Mr Ahmed to hand over the money he made from this enterprise. The price of not paying up in the next six months is another six years.”

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HMRC ARREST 14 ON £40 MILLION MONEY LAUNDERING CHARGESHer Majesty’s Revenue and Customs (“HMRC”) have announced the arrest of fourteen people on suspicion of laundering over £40 million in relation to an alcohol duty avoidance fraud.

The arrests were made under the POCA, with the twelve men and two women suspected to have been involved in attempting to conceal the origins of cash generated from a fraud which imported non-duty paid alcohol and sold it on the UK market.

The operation was conducted as a series of dawn raids, which undertook searches on a number of business and residential properties. Five lorries containing beer and wine were seized, as well as £650,000 in cash.

The racket was believed to have been involved in laundering a total of £40 million, which had been acquired in unpaid duties and taxes owed to the taxpayer.

HMRC have indicated that investigations are continuing and have removed computers and personal and business records found during the searches.

Alan Tully, the Assistant Director of Criminal Investigation at HMRC stated that “This is a major investigation into what we suspect is a well organised and professional attempt to launder the proceeds from a significant alcohol fraud and steal £40 million from the UK economy”.

“We are committed to stamping out alcohol fraud, which drains around £1 billion from public finances each year, affecting public services and legitimate retailers who have to compete with the illicit market.”

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FATF CONSIDERS VIRTUAL CURRENCIES AND THEIR RISKSThe Financial Action Task Force (“FATF”), the inter-governmental body designed to help promote consistent standards and effective implementation of anti-money laundering and terrorism financing legislation, has published a report on the risks posed by virtual currencies.

The report builds on a previous 2013 report addressing new payments products and services in developing a better understanding and risk matrix for virtual currencies, as well as engaging in discussions over potential money laundering and terrorist financing legislation in the area.

FATF consider there to be three aspects of virtual currencies which make them particularly vulnerable to money laundering and terrorist financing. The first is the anonymity, which allows both users and providers of virtual currencies to be effectively anonymous in their transactions, which can often facilitate the concealing of funds. The laundering of money can traditionally be curbed by checks and balances within the financial system, such as through face to face interactions and administration checks. Virtual currencies cut out this important aspect of information gathering for regulators.

The second factor is the decentralisation of the system, which means that it does not operate through the conventional national or international means for which legal jurisdictions have been developed. In contrast to traditional payment services, virtual currencies have no central oversight body or money laundering check requirements. Bitcoin, for example, does not run any identification and verification schemes on customers. Furthermore, it is difficult to pin down the data to a particular jurisdiction where assets are located, and can thus appear to exist in “a digital universe entirely outside the reach of any particular country”.

Finally, because of its use on the internet, the virtual currency offers an enormous global reach which allows financing to areas which had otherwise been considered too

difficult or remote to access by conventional means. Combined with the anonymity noted above, money can be channelled to and received by individuals from any location, provided they have access to the internet or mobile technology. The enormous potential span of the currency presents issues for isolating particular countries or groups of people through targeted sanctions.

The report notes that whilst there has been some success in clamping down on illegal activities, such as the action taken against Liberty Reserve and Silk Road, these may represent only the tip of the iceberg when it comes to necessary law enforcement in this area.

The USA has led the way in enforcement actions, with the Department of Justice taking the leading role in the investigation and prosecution of individuals behind Liberty Reserve and Silk Road; and the US Secret Service and the Manhattan (New York County) District Attorney’s Office jointly investigating the Western Express Cybercrime Group.

The approach taken to enforcement actions has varied between cases, but has typically involved prosecution against the website and company involved, and also against founders and employees of the scheme. The Liberty Reserve, along with seven principals and employees, were indicted and charged under the PATRIOT Act as carrying on an unregistered money transmitter business and being concerned with $6 billion in money laundering. In the Silk Road case, the US Department of Justice issued a criminal complaint against the alleged owner of Silk Road and seized the website and all bitcoins lodged with it. It also prosecuted Ross Ulbricht, who is currently facing charges in San Francisco. Western Express pleaded guilty to money laundering, fraud and conspiracy offences, and a number of individuals involved, including the owner/operator of the site, have also been charged.

NEWS

INTERNATIONAL

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FATF COMMENCES ON FOURTH ROUND OF MONEY LAUNDERING ASSESSMENTSFATF have announced the beginning of the fourth round of member countries’ mutual evaluations of each other’s money laundering and terrorist financing provisions.

Countries will be monitored to ascertain their compliance with the new FATF standards on anti-money laundering and terrorist financing and key areas in which states can improve will be highlighted. There has been agreement on the proposed methodology for assessing such compliance, as outlined in a paper published in February 2013.

The new assessments will focus more on enforcement issues than the third round of evaluations, in order to ensure that anti-money laundering and terrorist financing legislation is being enacted consistently and appropriately in a practical context. FATF are hoping that the evaluations will help produce “systems that deliver results and lead to a stronger and safer global financial system”.

FATF have announced that reviews of Norway and Spain should be finalised and published by late 2014 and reviews of Belgium and Australia will be published in February 2014.

The latest round of evaluations comes at the conclusion of the third round which began in 2004. FATF acknowledged that member countries had “significantly [strengthened their] frameworks for combatting money laundering and terrorist financing” including in four key areas:

■ Criminalisation – Money laundering and terrorist financing legislation is comprehensive and is adequately enforced within the jurisdiction;

■ Identification and Reporting – Due diligence procedures are adequate for identification and that the suspicious activity reporting is comprehensive and adhered to;

■ Powers – Regulatory bodies have sufficient investigative and enforcement tools to perform their jobs adequately; and

■ Implementation of International Agreements – Member countries are implementing international agreements and rulings in a sufficient and comparative way.

Countries with outstanding issues highlighted in their most recent third-round assessment reports are being urged to remedy the identified gaps as soon as possible. Member countries have committed to rectifying any shortcomings swiftly and FATF have further instigated a follow up procedure for regular reporting by members for remedying these procedures. For example, FATF have recently issued a call on Japan to rectify the “numerous and serious deficiencies” identified in its third mutual evaluation report.

FATF has separately issued calls on Iran and North Korea to address money laundering and terrorist financing issues given the threat they pose to the integrity of the international financial system. It has also expressed concerns about the insufficient progress made by Algeria, Ecuador, Indonesia and Myanmar in their action plan commitments. FATF have urged its members to be cautious with the risks arising from dealing with individuals or companies in these jurisdiction.

As a part of the process of addressing defects in some countries’ money laundering and terrorist financing procedures, FATF has announced specifically agreed action plans with a number of countries. Many of the jurisdictions, who are predominantly located in the Middle East, Africa or South East Asia, have not yet been subject to a review under the mutual evaluations procedures. The progress towards achieving the goals of these action plans will be monitored by FATF.

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STANDARD CHARTERED FINED $300 MILLION FOR MONEY LAUNDERING BREACHES IN USStandard Chartered Bank (“SCB”), one of Britain’s largest international banks, has been fined $300 million for failings in its suspicious transaction reporting mechanism which resulted in potentially high risk transactions in the United Arab Emirates (“UAE”) and Hong Kong remaining undetected.

The anti-money laundering controls had been imposed on the bank following SCB’s 2012 settlement with the New York State Department of Financial Services (“NYDFS”) over violations of sanctions. It was an independent monitor at the bank, whose presence had also been agreed as part of the 2012 settlement, who discovered the breach in controls.

As a result, SCB have been required to suspend its dollar clearing operations for high-risk retail business clients from SCB Hong Kong and to adopt a 90 day exit strategy for high risk small and medium sized enterprises (“SMEs”) in the UAE. Additionally, without regulator consultation, SCB New York will not be able to open US dollar clearing accounts for new customers.

SCB have indicated that between 1,400 and 8,000 accounts are expected to be affected. SCB had initially considered selling part of the SME business, but instead SCB has subsequently circulated letters to its customers informing them that they would be no longer be providing services to the individuals and closing their account in 30 days.

This move may expose them to legal action in UAE for any accounts which have been closed. The UAE Central Bank has warned that SCB could face claims for “the material and moral damage which is falling on them”.

In the press release from NYDFS, Superintendent Lawsky said: “If a bank fails to live up to its commitments, there should be consequences. That is particularly true in an area as serious as anti-money laundering compliance, which is vital to helping prevent terrorism and vile human rights abuses.”

SCB, in a statement released on their website, said they “accept responsibility for and regret the deficiencies in the anti-money laundering transaction surveillance system at its New York branch. The Group have begun extensive remediation efforts and is committed to completing these with utmost urgency.”

As a result of the action, the Hong Kong regulator, the Hong Kong Monetary Authority (“HKMA”), has been swift to defend its own anti-money laundering controls in light of the scandal.

In a press statement, the HKMA said it “has a robust anti-money laundering and counter financing of terrorism regime that complies with international standards, including customer due diligence and transaction monitoring requirements under the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance.”

“When a bank conducts cross border business transactions involving a foreign jurisdiction, the bank and the relevant authorities in that jurisdiction would have to ensure that the relevant AML laws and regulations in that jurisdiction are fully complied with.”

INTERNATIONAL ENFORCEMENT ACTION

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PWC FINED $25 MILLION FOR “WHITEWASH” REPORTOn 18 August 2014, the NYDFS announced a $25 million fine for PricewaterhouseCoopers Regulatory Advice Services (“PwC”) and a two year suspension from consulting engagements with other financial institutions regulated by NYDFS, as a result of improperly altering a report to regulators on the subject of sanctions and anti-money laundering.

The PwC report, detailing the systems and controls in place at Bank of Tokyo Mitsubishi (“BTMU”), was found to have been altered by PwC under pressures from BTMU executives. The report was conducted to review historical transactions which the bank had performed on behalf of sanctioned companies and entities.

Following a year-long investigation by NYDFS, PwC were found to have “progressively sanitised” draft versions of the report, under pressure from BTMU executives. For example, one such change related to BTMU’s special instructions to employees for avoiding compliance alerts known as “wire stripping”. A previous draft of PwC’s report included the proviso that “had PwC know[n] about these special instructions at the initial Phase of the HTR then we would have used a different approach in completing this project”. The final report, however, reached the opposite conclusion, noting PwC “have concluded that the written instructions would not have impacted the completeness of the data available for the HTR and our methodology to process and search the HTR data was appropriate.”

Further, PwC were found to have deleted most of the PwC’s discussion regarding the wire-stripping; the English translation of the wire-stripping instructions (which described BTMU as conducting transactions with “enemy countries”); and several forensic questions PwC had considered necessary for consideration.

Internal emails from one of the directors responsible for the matter suggested that he had considered the bank’s interest over the requirement for impartiality. In one statement the NYDFS has released, the director said “I’m not advocating looking for anything in the cases deemed allowable because if you find something at this point it will open up a whole other can of worms.” In another, he stated that to “raise an issue of data completeness at this point does not do anyone, especially the bank, any good.”

Benjamin Lawsky, Superintendent of Financial Services at NYDFS, said in his statement that “When bank executives pressure a consultant to whitewash a supposedly ‘objective’ report to regulators – and the consultant goes along with it – that can strike at the very heart of our system of prudential oversight.”

Miles Everson, the head of PwC’s advisory unit in the US, stated that “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. PwC’s detailed report also disclosed the relevant facts that PwC learned subsequent to its search process.”

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FOR FURTHER INFORMATION OR ADVICE, PLEASE CONTACT:

Michael McKee Head of Financial Services Regulatory Partner London T +44 (0)20 7153 7468 michael.mckee@dlapiper.com

Gavin Punia Associate London T +44 (0)20 7153 7072 gavin.punia@dlapiper.com

Phil McEachen Associate T +44 (0)20 7153 7713 philip.mceachen@dlapiper.com

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This publication is a general overview and discussion of the subjects dealt

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