Central Bank fines Wells Fargo nearly €6m for regulatory breaches

The Central Bank has fined an Irish subsidiary of US bank Wells Fargo nearly €6 million for regulatory reporting breaches and related governance failings.

The regulator said the Wells Fargo Bank International Unlimited Company (WFBI), based in North Dock, Dublin 1, had admitted five "serious" breaches between January 2014 and February 2019.

They included the failure to accurately report the company’s capital position and to comply with a requirement in relation to liquidity testing.

The Central Bank had determined that the appropriate fine was €8.4 million but this was reduced by 30 per cent to €5.88 million in accordance with the bank’s settlement discount scheme.

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The fine is the second largest ever handed out by the Central Bank after the €21 million fine it issued to Permanent TSB in May of this year for “serious failings” in relation to the ongoing tracker mortgage scandal.

Last week, the regulator also fined an Irish subsidiary of US investment bank JP Morgan €1.6 million after it was found to have breached Irish financial services regulations.

The Central Bank’s investigation into the Wells Fargo subsidiary came about as a result of an inspection of regulatory reporting in five peer credit institutions in 2016. The inspection focused on end-to-end processes, internal controls and governance of regulatory reporting.

Systemic failings

The Central Bank said it had found “serious and systemic failings” in the firm’s regulatory reporting capability, relating to its failure to calculate and report accurately the firm’s capital position.

It also reprimanded the firm for “weak governance arrangements including lack of robust board and senior management oversight”.

A spokesperson for the US bank said: “WFBI takes its regulatory obligations seriously and we are committed to complying fully with regulatory requirements.

“These events concerned regulatory reporting and did not affect our customers. We have made significant improvements to our systems, processes and resources for regulatory reporting to the Central Bank of Ireland [CBI] since these events,” they added.

“ We have also integrated continuous review and improvement into how we operate to ensure that our regulatory reporting to the CBI continues to be complete, timely and accurate,” they said.

Seána Cunningham, the Central Bank’s director of enforcement and anti-money laundering, said: “It is a minimum requirement of being regulated by the Central Bank that firms submit accurate and timely regulatory returns.

“Regulatory returns are a tool used by the Central Bank to monitor the financial position of credit institutions and the risks to which they are exposed,” she said. “The submission of inaccurate information undermines the Central Bank’s ability to properly supervise. Miscalculation and misreporting of the firm’s capital position, in particular, is a fundamental failure.

“A firm understanding its capital position, and the accurate reporting of this in its returns, are of paramount importance to understanding its safety and soundness,” she added.