Lawsky’s Bank of Tokyo Action Could Unsettle Regulators Globally
By Jeff Horwitz and Maria Aspan
The most aggressive enforcer of federal sanctions law may now be New York State, which on Thursday fined Bank of Tokyo Mitsubishi UFJ $250 million. The settlement allows the Japanese bank to put sanctions allegations behind it, but for other banks and regulators, the trouble may just be starting. The state’s deal with the company effectively trumps a much smaller 2012 settlement the bank cut with the Office of Foreign Assets Control, a Treasury Department wing that exists to enforce “sanctions based on US foreign policy and national security goals,” according to its website. By supplanting OFAC as the more aggressive enforcer in the BTMU case, Benjamin Lawsky, superintendent of the New York State Department of Financial Services, has again interjected his office into international diplomacy and financial regulatory issues normally left to sovereign nations. The move puts Washington regulators in an uncomfortable position, with their foreign counterparts upset that the feds can’t centrally control policy and U.S. critics jeering that Lawsky’s harsher penalties prove that other domestic regulators are too soft. “Lawsky’s action will certainly be viewed by some as rogue and others as heroic — it’s a tough time,” says Karen Shaw Petrou, managing partner of Federal Financial Analytics. Overseas, the former view will likely predominate. The foreign banks and international regulators Petrou works with “really do not understand how a New York regulator could do with authority what Lawsky does,” she says.