In the first case of a state taking on bank consultants, New York regulators have banned Deloitte Financial Advisory Services from financial consulting for one year.

Deloitte will also pay the state $10 million and will put in place safeguards over its consulting arm, the New York State Department of Financial Services said Tuesday. The state said that Deloitte violated banking law while consulting with Standard Chartered, which hired the firm to review its anti-money laundering processes.

In addition, the Department of Financial Services will require all independent consulting firms to comply with the reforms that Deloitte will implement. Those reforms include enhanced disclosures, anti-tampering provisions, rules to ensure the consultant's independence and monthly meetings with regulators.

The state agency said it hopes other regulators will use these reforms as a template for reining in bank consultants, which have come under fire from consumer groups for charging high fees and often maintaining cozy relationships with their clients. New York is the first state to take action against the multibillion-dollar industry.

"The state's agreement with Deloitte will serve as a new model for reforming the financial services consulting industry in New York as well as across the country," New York Governor Andrew Cuomo said in a press release. "When tasked by government agencies to undertake regulatory work at financial institutions, it is critical for these consultants to remain autonomous and avoid conflicts of interest."

In a statement, Deloitte said it was it "looks forward to working constructively" with the New York regulators to "establish best practices and procedures that are ultimately intended to become the industry standard for all independent consulting engagements under [the agency's] supervision." The statement also said the company was "pleased" that the state's investigation found no evidence that it "knew of, or aided, abetted or concealed any alleged violation of law" by Standard Chartered.

Standard Chartered hired Deloitte Financial Advisory in 2004 to review and report on its anti-money laundering practices, after the New York Department of Finance and the Federal Reserve Bank of New York identified compliance deficiencies at the bank. On Tuesday, the regulator said that Deloitte deleted information from its final report, at the bank's request, and illegally disclosed confidential information about other Deloitte clients to Standard Chartered.

"At times, the consulting industry has been infected by an 'I'll scratch your back if you scratch mine' culture and a stunning lack of independence," Benjamin Lawsky, New York's superintendent of financial services, said in Tuesday's release. "Today, we are taking an important step in helping ensure that consultants are independent voices — rather than beholden to the large institutions that pay their fees. Our aggressive work investigating and reforming the consulting industry is far from over and will continue in the days, weeks, and months ahead."

Last week, Deloitte Corporate Finance bought McColl Partners, an investment bank founded by retired Bank of America (BAC) chief executive Hugh McColl.