PRICEWATERHOUSECOOPERS TO PAY NY $25 MILLION OVER WORK WITH BANK OF TOKYO-MITSUBISHI

(Reuters) - PricewaterhouseCoopers has agreed to pay $25 million (14 million pounds) and its regulatory advisory unit will abstain from certain consulting work for New York-regulatedbanks for two years to settle accusations that it sanitized a report about sanctions-related controls at Bank of Tokyo-Mitsubishi UFJ, according to people familiar with the matter.

New York's Department of Financial Services, which regulates banks in the state, is expected to announce the agreement with PwC on Monday, one person said. The person declined to be identified as the matter is not yet public.

In June 2013, Bank of Tokyo-Mitsubishi agreed to pay $250 million to New York State for deleting information from $100 billion in wire transfers that authorities could have used to police transactions with Iran and other sanctioned countries.

At issue with Bank of Tokyo-Mitsubishi were 28,000 transactions the bank processed through New York between 2002 and 2007.

PricewaterhouseCoopers was engaged as a consultant to the bank for a year starting June 2007, the person said. In the 11th month of the engagement, the firm found that the bank had a policy to strip out wire information for sanctioned clients including Iran, Sudan andMyanmar.

PwC said it would have done a more in depth investigation had it known the bank's policy, the person said.

But under pressure from bank lawyers and executives, the consulting firm diluted its report to regulators about the bank policy and stated its review was appropriate, the person said.

Information that the report was watered down could cause the New York regulator to revisit the Bank of Tokyo-Mitsubishi settlement, the person said.

"This matter relates to a single engagement completed more than six years ago in which PwC searched for and identified relevant transactions that were self-reported to regulators by PwC's client. PwC's detailed report also disclosed the relevant facts that PwC learned subsequent to its search process," Miles Everson, PwC's U.S. Advisory leader said in statement.

"The firm is committed to improving continuously and meeting changes in regulatory expectations," he added.

A Bank of Tokyo-Mitsubishi spokesman told Reuters that the bank does not have detailed information on the matter.

The action against PwC is part of a crackdown on so-called independent consultants by New York's financial regulator, led by DFS superintendent Benjamin Lawsky.

In June 2013, Deloitte LLP's financial advisory unit agreed to pay $10 million and refrain for one year from new business with New York-regulated banks to settle accusations it watered down a report on money laundering controls at Standard Chartered Bank.

Earlier, the British bank agreed to pay New York $340 million over its dealings with Iranand other sanctioned countries after the regulator threatened to revoke its license to operate in the state.

In the Deloitte case, Lawsky said he was taking a step to ensure that consultants were "independent voices rather than beholden to" the institutions that pay their fees.

DFS oversees certain New York banks and New York branches of foreign banks.

Reuters