November 20, 2017

Warren, Van Hollen Seek Information from OCC on Dubious Bank of Tokyo License Conversion

Senators Express Concern about Allowing Bank to Sidestep Sanctions Investigation by State Regulators; Raise Concerns About Potential Conflicts of Interest

Washington, DC - U.S. Senators Elizabeth Warren (D-Mass.) and Chris Van Hollen (D-Md.) today sent a letter to the Office of the Comptroller of the Currency (OCC) asking a series of questions about the questionable decision to allow the Bank of Tokyo to convert its license from a New York State license to a federal license in order to bypass a state investigation into whether the bank was allowing its clients to evade sanctions on countries like Iran and North Korea.

Last week, the OCC approved the Bank of Tokyo's application to convert its New York State license to a federal license, placing it under the regulatory authority of the OCC rather than the New York State Department of Financial Services (DFS). The Bank of Tokyo, which has a long record of compliance problems as a result of allowing clients to transfer funds from sanctioned entities, was under DFS investigation at the time of the OCC's decision to approve the bank's federal license conversion. Immediately following the license approval, the Bank of Tokyo reportedly ordered the DFS to suspend its investigation and expelled examiners from a Manhattan branch.

In their letter to Acting Comptroller of the Currency Keith Noreika and recently confirmed OCC comptroller Joseph Otting, the senators raise a number of concerns: "We are disturbed by this decision, which appears to (1) allow the bank - which has a long record of compliance problems with the New York Department of Financial Services (DFS) - to evade an ongoing state-level investigation; and (2) run counter to standard OCC policies and procedures for licensing decisions," the senators wrote. "We are deeply troubled that the OCC would not fully consider the implications of allowing a bank to change its charter in the midst of an investigation into potential sanctions violations given the recent tension related to North Korea's nuclear program."

The letter also expresses concern about a possible conflict of interest involving Mr. Noreika, who previously worked as a lawyer for the parent company of the Bank of Tokyo before entering government service. "...Because Mr. Noreika represented Mitsubishi UFJ Financial Group, the parent company of the Bank of Tokyo-Mitsubishi, prior to entering government service, the decision raises additional questions about conflicts of interest that may have affected the OCC process and decision," the senators continued. "That the OCC took these unusual actions under Mr. Noreika's leadership is especially troubling."

The senators are seeking the following information from the OCC by December 1st:

If, when considering the Bank of Tokyo's application, the OCC evaluated whether the Bank had applied for the license conversion in order "to escape supervisory actions by its current regulator."
- If so, how the OCC conducted this evaluation and what conclusion the agency reached.
Whether the OCC conducted an evaluation of the Bank of Tokyo's compliance history prior to approving the bank's federal license, as required by its Comptroller Licensing Manual.
Why the OCC approved the Bank of Tokyo's license conversion without considering the information submitted by DFS on the bank's safety, soundness, and compliance.
Whether the Bank of Tokyo's expulsion of DFS inspectors from the premises after receiving its federal license was legal.
Details on the nature of Mr. Noreika's reported recusal from the OCC's licensing decision.

The Senators also requested additional documents and materials from OCC.

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