Wells Fargo Bank International has admitted to serious failings in its regulatory reporting and governance and has been fined €5,880,000 for its offences by the Central Bank.

The Wells Fargo company, an unlimited entity, admitted to five breaches that took place between January 2014 and February 2019. The breaches include failure to accurately report its capital position and to comply with a requirement in relation to liquidity testing.

The Central Bank concluded that a fine of €8.4m was appropriate, and reduced this by 30% in accordance with its settlement discount scheme.

Director of enforcement Seána Cunningham stated: “Wells Fargo’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. The financial penalty imposed reflects the widespread systemic failures in this instance, and the importance of regulatory returns as a tool used by the Central Bank to supervise firms.”

The failures included:

In Association with

• Failure to calculate and report accurately the firm’s capital position
• Failure to periodically monetise a sample of liquid assets, as required by legislation
• Weak governance arrangements including lack of robust board and senior management oversight
• Inadequate internal control mechanisms including a failure to properly document processes and procedures
• Inadequate review by internal audit of regulatory reporting processes and procedures
• Weaknesses in IT systems and a significant number of manual adjustments used to prepare regulatory returns.

Cunningham commented: “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.  This enforcement action refers to failings in relation to both capital reporting and liquidity testing.  For that reason it is considered to be particularly serious.”

Regulatory Reporting

A Wells Fargo spokesperson commented: “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 since these events. 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.”

The Central Bank has imposed more than €96m in fines since 2006, including this latest penalty. Wells Fargo co-operated with the investigation, which led to the mitigation of the fine.

Full details of the breaches and the rationale behind the imposition of the fine can be found here.