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The Financial Conduct Authority (FCA) said on
Wednesday the fine was levied on Bank of New York Mellon's
London branch, and on Bank of New York Mellon International
Limited for breaches that spanned nearly six years from November
2007 to August 2013.
Bank of New York Mellon is the world's biggest custody bank,
whose business is looking after financial assets such as stocks
and bonds for customers.
The collapse of Lehman Brothers in 2008 prompted UK regulators
to check that custody banks like BNY were complying with safe
keeping rules as markets went into meltdown globally.
"The firms' failure to comply with our rules including their
failure to adequately record, reconcile and protect safe custody
assets was particularly serious given the systemically important
nature of the firms and the fact that safeguarding assets is
core to their business," Georgina Philippou, acting director of
enforcement and market oversight at the FCA said.
BNY, which had $28.5 trillion of assets under custody globally
at the end of 2014, said the fine was fully covered by
pre-existing legal reserves and no clients suffered any loss as
a result of the issues identified by the FCA.
A bank said it had undertaken a broad internal review with the
assistance of outside accountants and legal advisers which has
led to new and improved policies and operational procedures.
"We regret in this case that we did not meet our standards or
those of the FCA," the bank said.
When the rule breaches occurred, the two divisions of BNY were
looking after assets worth about 1.5 trillion pounds, and
serving 6,089 customers in Britain.
Serious rule breaches, which the bank's internal compliance
failed to spot, also included failing to separate customer money
from the bank's, the FCA said.
BNY avoided a 180 million pound fine by settling the case early.
The safe custody rules aim to ensure that if a custody bank goes
bust, money can be returned to customers quickly without having
to work out who owns what.
($1 = 0.6800 pounds)
(Reporting by Huw Jones, editing by Carolyn Cohn and Jane
Merriman)
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