• The branches broke 12 CFR ss21.21 and 21.11 and 31 CFR s1010.610. In doing so, the OCC says, they failed to adopt and implement a compliance programme that adequately covered the required BSA/AML programme elements, failing to send off suspicious activity reports about their customers, and failing to implement appropriate BSA/AML 'due diligence' programmes for correspondent accounts of foreign financial institutions. The problems date back to June 2016.
• Some of the deficiencies in the branches' compliance efforts that contravened 12 CFR s21.21 happened because: they had an inadequate system of internal controls, ineffective independent testing and a weak BSA officer/staffing function; they had systemic deficiencies in their transaction monitoring systems which resulted in monitoring gaps in several highly risky areas, including international wires flowing through highly risky countries, and which resulted in a failure to send off SARs on time; they had deficiencies in their "due diligence programme" for correspondent accounts for foreign financial institutions, including inadequate analyses of the highly risky ancillary products and international wire transactions flowing through the correspondent accounts to help them detect unusual or potentially suspicious activities; they had gaps in their procedures for trade finance monitoring; and they had an inferior audit function and, indeed, the audits that covered some of the riskiest customers and products spotted some significant problems.

The bank, a subsidiary of Mitsubishi UFJ Financial Group, has 90 days to come up with a written action plan that details the remedial actions that it has to take for all three branches to achieve compliance with the OCC's demands. The branches continue to operate under an OCC consent order, issued in November 2017, that even then required them to take corrective action to improve their compliance with the rules of the US Office of Foreign Assets Control . This marked the moment when they became "federally regulated" by the OCC, having previously received consent orders from the the New York Department of Financial Services in 2013 and 2014 because that regulator had the same "economic sanctions concerns" about their compliance with OFAC. Surprisingly, in view of this litany of shortfalls, the OCC is being clement in its refusal to levy a fine.

The NYDFS and the OCC have been at loggerheads in the courts recently. Last year Maria Vullo, the Superintendent of the NYDFS, challenged the OCC's so-called "fintech charter decision," by which it decided to grant special-purpose national bank charters to financial technology or FinTech companies. The US District Court for the Southern District of New York backed a motion to dismiss the case in December. The NYDFS licenses and supervises 288 state and international banks and approximately 600 other financial service firms.