The U.S. Securities and Exchange Commission (SEC) has fined Bank of New York Mellon (BNY Mellon) $14.8 million for bribery of foreign officials and failure to maintain adequate internal controls over the bank's anti-corruption program.

The SEC said that BNY Mellon bribed foreign officials of a Middle Eastern country's sovereign wealth fund (SWF) by providing the officials' family members with student internships at the bank. In addition, the SEC said that although the bank had an anti-corruption compliance program in place, its internal controls were insufficient to properly implement the program.

Specifically, the SEC found that BNY Mellon's provision of student internships violated the anti-bribery provision of the Foreign Corrupt Practices Act (FCPA), which makes it illegal for U.S. companies to offer or provide “anything of value” to foreign public officials in exchange for gaining or retaining business.

The SEC filed a cease-and-desist order against BNY Mellon that alleged the bank hired three interns related to senior officials of the Middle Eastern country's SWF following repeated requests by those officials. The order stated that the bank conducted internal discussions that resulted in the decision to hire the interns because those hires were necessary to retain the SWF's business.

The SEC also found that BNY Mellon failed to have the necessary internal controls in place to prevent the alleged bribery. Specifically, the SEC charged that the bank had no policy in place against the hiring of clients' relatives and that managers were able to make those hires without the proper review from human resources.

“Financial services providers face unique corruption risks when seeking to win business in international markets, and we will continue to scrutinize industries that have not been vigilant about complying with the FCPA,” said Kara Brockmeyer, chief of the SEC Enforcement Division's FCPA Unit, in a press release announcing the fine.

BNY Mellon has agreed to pay $8.3 million in disgorgement, $1.5 million in prejudgment interest and a $5 million civil penalty to settle the FCPA violations allegations.

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