NYDFS $50mm Consent Order for Failure to Cooperate with Investigation

The New York Department of Financial Services (NYDFS) and a European bank, along with the bank’s New York branch, recently entered into a Consent Order to settle allegations that the bank failed to cooperate by omitting requested information during NYDFS’s investigation of the bank’s connections to the 2016 Panama Papers leak.  The bank is licensed by NYDFS to operate a foreign bank branch in New York.

The Consent Order found that the Panama Papers leak “shed light on the failure of global financial institutions to follow legal requirements designed to ensure that their customers are not engaged in or facilitating fraud, money laundering, or other criminal acts.”  This bank was one of many appearing in the documents leaked from the law firm at the center of the scandal. 

After the Panama Papers leak, NYDFS investigated its licensees for any connections to the law firm at issue.  In 2016, NYDFS issued information requests to the bank related to the Panama Papers, such as requesting communications with entities formed by the implicated law firm and any investigations by any other regulatory authority regarding the bank’s dealings with that law firm.  The bank’s New York branch allegedly responded to the request only as it related to that branch, without informing NYDFS of the scope, even though NYDFS’s request was broader.  In 2018, NYDFS sent a follow-up request, and the bank allegedly knew that the request was not limited, but it carved information out of the response regarding certain European subsidiaries, again without informing NYDFS.  A third request by NYDFS in 2019, after there were media reports about the bank’s connections to the law firm, then yielded substantive documents from the bank in response.

NYDFS found violations of New York banking law for the bank’s failures, after multiple requests, to provide requested information.  NYDFS and the bank agreed to settle the matter through this Consent Order.