What the Deloitte Crackdown Means for Banks
By Chris Cumming and Maria Aspan
The New York crackdown on Deloitte’s financial-consulting business will send waves through its bank customers, competitors and federal regulators. On Tuesday, New York’s Department of Financial Services became the first state agency to take action against a bank consultant, fining Deloitte Financial Advisory Services $10 million in connection with its anti-money-laundering advisory work for Standard Chartered in 2004 and 2005. The regulator also banned Deloitte from working for New York-chartered banks for one year. Even though the New York sanctions on Deloitte would only apply to state-chartered banks, they could have a spillover effect in terms of industry-wide reputational risk. Some consultants expect to see big national banks — especially those already under regulatory scrutiny — also rethinking their use of the firm. “It would be up to the national banks about whether they wish to use a company under sanction” by New York state, “particularly if [they] had ongoing matters with the New York state supervisor elsewhere in its company,” says Karen Shaw Petrou, a managing partner at Federal Financial Analytics Inc.