THE CENTRAL BANK has fined Wells Fargo Bank International (WFBI) €5.8 million over failings in its regulatory reporting. 

The firm has admitted five breaches which occurred between 1 January 2014 and 28 February 2019, which include failure to calculate and report its capital position, as well as another breach for weak governance arrangements. 

The Central Bank found the governance arrangements and internal controls relating to regulatory reporting requirements in place at the time were inadequate to such an extent that the firm did not detect its own non-compliance. 

WFBI is a wholly-owned subsidiary of Wells Fargo & Co, – a US-based multinational banking and financial services holding company. 

The Central Bank found that a fine of €8.4 million was appropriate, but reduced it by 30% in accordance with the settlement discount scheme provided by the Central bank’s administrative sanctions procedure. 

A statement from the Central Bank said there were mitigating factors involved in the decision on what penalty to impose, including the firm’s “full admissions at the earliest opportunity in the process” allowing the regulator “to make time, cost and resource savings”.

WFBI’s audited accounts for year ended 31 December 2018 show a turnover of $586 million and operating income of $340 million. 

The five breaches by the firm were: 

• failure to maintain robust governance arrangements in relation to regulatory reporting, with the board failing to oversee the implementation and monitoring of governance arrangements. 
• failure to develop, document and maintain policies and procedures.
• failure to submit revised returns when audited figures were signed off.
• failure to periodically monetise a sample of liquid assets.
• miscalculation of exposure values for loans and receivables and off balance sheet items.

Following the identification of the breaches, the Central Bank requested WFBI to take remedial action. 

The Central Bank said the firm did not initially complete the required remedial action necessary in 2017 to address the deficiencies and risks identified by the Central Bank, and deadlines were extended. 

It said it is now satisfied it had taken the necessary steps to rectify the failings that lead to the breaches. 

Obligations

In a statement issued today, a spokesperson said: “WFBI takes it 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 since these events.

The spokesperson 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.”

Seána Cunningham, the Central Bank’s director of enforcement and anti-money laundering said it was 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. 

“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.

“WFBI’s serious failings are of concern to the Central Bank and indicate that there was a poor compliance culture as it pertained to regulatory reporting,” she added. 

This is the Central Bank’s 131st settlement since 2006 under its administrative sanctions procedure, bringing the total fines imposed to over €96 million.