The Financial Reporting Council has launched an investigation into KPMG in relation to its role in the recent BNY Mellon client compliance failures.
The British accounting watchdog will look into the conduct of KPMG auditors in relation to BNY Mellon’s London branch and its compliance with the FCA’s client assets rules in the years between December 2007 and 2011.
In April, BNY Mellon, the world biggest custody bank, was fined £126m by the FCA for failing to comply with custody rules. The regulator took action against BNY Mellon’s London branch and its international division for failing to sufficiently record, reconcile and protect client custody assets.
The failings occurred as BNY Mellon used global platforms to manage safe custody assets, which did not make clear which entity of the behemoth company clients had contracted. This meant that the firm failed to meet its obligations under the FCA’s custody rules.
A KPMG spokesman says it will “cooperate fully with the FRC in its enquiries” and is ”committed to setting the highest standards in our work”.
BNY Mellon’s London branch was responsible for £1.3trn during the period of the breach and the international division was responsible for £236bn at the time.