Huffpost UK uk

Standard Chartered To Pay Multi-Million Dollar Settlement Over Iranian Allegations

Posted: Updated:
Print Article
Standard Chartered will be monitored for at least two years by US regulators
Standard Chartered will be monitored for at least two years by US regulators

British banking giant Standard Chartered has agreed a $340 million (£217m) settlement with New York regulators over allegations it hid $250 billion (£160 billion) of transactions with the Iranian government.

The 160-year-old bank saw £6 billion wiped from its value amid claims it exposed the US to terrorists, drug kingpins and weapon dealers.

The New York State Department of Financial Services (DFS) accused it of keeping around 60,000 transactions secret from US regulators over nearly 10 years.

The regulator's superintendent said a monitor would be installed at the bank for at least two years to evaluate money-laundering controls at its New York branch.

Standard previously said in a statement it "strongly rejects" the portrayal by the DFS, saying the claims were inaccurate and that 99.9% of its dealings with Iran complied with regulation.

Standard, which employs nearly 90,000 people worldwide, including 2,100 in the UK, and sponsors Liverpool Football Club, was threatened with losing its licence to operate within New York state.

In an explosive legal order, DFS superintendent Benjamin Lawsky said: "In short, SCB (Standard Chartered Bank) operated as a rogue institution."

Standard, between January 2001 and 2010, conspired with Iranian clients to route payments through New York after stripping information from wire transfer messages used to identify sanctioned countries, the regulator claimed.

The bank moved 60,000 transactions through its New York branch that were subject to US economic sanctions, and then covered up the dealings, the financial watchdog claimed.

The institutions include the Central Bank of Iran as well as Bank Saderat and Bank Melli, both of which are also Iranian state-owned.

The US suspected that the Gulf state was using its banks to finance "terrorist groups" such as Hezbollah, Hamas and the Palestinian Islamic Jihad.

Findings include a memo sent in October 2006 from the bank's US chief executive to the group executive director in London, raising concerns about the activities with Iran.

He said: "Firstly, we believe (the Iranian business) needs urgent reviewing at the group level to evaluate if its returns and strategic benefits are ... still commensurate with the potential to cause very serious or even catastrophic reputational damage to the group.

"Secondly, there is equally importantly potential of risk of subjecting management in US and London (for example you and I) and elsewhere to personal reputational damages and/or serious criminal liability."

To which the group executive director allegedly replied: "You f****** Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians?"

The watchdog, which reviewed 30,000 pages of documents during the investigation, also uncovered evidence of apparently similar schemes at the bank with other US-sanctioned countries such as Libya, Burma and Sudan.

A statement released by Standard last week said: "The group does not believe the order issued by the DFS presents a full and accurate picture of the facts.

"Standard Chartered ceased all new business with Iranian customers in any currency over five years ago."

Unveiling a 9% rise in pre-tax profits for the first half of the year to 3.6 billion US dollars (£2.3 billion), chief executive Peter Sands said the bank sees "some virtue in being boring".

Mr Sands, previously touted as a successor to Bank of England governor Sir Mervyn King, went on: "For me as chief executive, our culture and values are a top priority, something we can never take for granted, something we embed in our systems of measurement and reward."

The bank has no UK branches but is headquartered in London, a key hub for its wholesale banking business.