The bank gave student internships to family members of government officials who were linked to a Middle East sovereign wealth fund. The interns were not evaluated using the bank's existing internship programme, which has stringent hiring standards, but were hired with the "knowledge and approval of senior BNY Mellon employees", the US Securities and Exchange Commission (SEC) said.
The officials directly asked for the internships for their families and made numerous follow-up requests, and BNY Mellon employees viewed the internships as important to keeping the business of the fund, the SEC said.
The sovereign wealth fund involved has not been named.
BNY Mellon lacked sufficient internal controls to prevent and detect this sort of hiring process, the SEC said. Sales staff and client relationship managers were given wide discretion in hiring and human resources staff were not trained to spot potential problems of this sort, it said.
Global corporate crime expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com said: "This is a timely reminder for firms given the summer vacation internship season is now in full swing. This latest enforcement underscores the importance of not allowing internship programs to be abused and offers up a very simple lesson - if you have internship program rules, follow them."
Andrew J. Ceresney, director of the SEC's enforcement division said: "The Foreign Corrupt Practices Act prohibits companies from improperly influencing foreign officials with ‘anything of value,’ and therefore cash payments, gifts, internships, or anything else used in corrupt attempts to win business can expose companies to an SEC enforcement action."
"BNY Mellon deserved significant sanction for providing valuable student internships to family members of foreign officials to influence their actions," Ceresney said.
BNY Mellon has agreed to the payments "without admitting or denying the findings", the SEC said.