NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES vs DELOITTE FINANCIAL ADVISORY SERVICES LLP. RE: $10 MILLION FINE & A ONE-YEAR BAN FOR WATERING DOWN ITS REPORT ON MONEY LAUNDERING.

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Deloitte LLP’s financial advisory services unit agreed to pay $10 million and accept a one-year ban from consulting for New York-regulated banks to settle regulators’ allegations the firm mishandled its anti-money-laundering work for U.K. bank Standard Chartered PLC.

The accusations by the state regulator, Benjamin M. Lawsky, stemmed from Deloitte’s work for Standard Chartered, the British bank accused of illicitly transferring billions of dollars on behalf of Iran.

Under a 2004 agreement with state and federal regulators, Standard Chartered hired Deloitte to look for suspicious money transfers routed through its New York branches. But when Deloitte submitted a report to regulators, Mr. Lawsky said, it relented to pressure from the bank and watered down its recommendations for rooting out money laundering.

Federal authorities have yet to impose a similar crackdown. Grappling with scarce resources, they rely on consultants to help remedy flaws at big banks. More recently, however, they have indicated a willingness to rethink their ties with consultants.

“While the use of independent consultants can be an effective supervisory tool, there are certainly lessons to be learned from our experience, and we believe we can improve the process going forward,” Daniel P. Stipano, who supervises enforcement at the comptroller’s office, said in testimony at the hearing in April.

But when Senator Sherrod Brown asked whether the agency had adopted written standards for the consulting firms, Mr. Stipano conceded that the agency had not yet “put pen to paper.”

Mr. Brown will urge the Federal Reserve and the Office of the Comptroller of the Currency to keep a closer watch on the multibillion-dollar consulting industry, which has become something of a shadow regulatory force on Wall Street.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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