Monday, August 6, 2012

Standard Charter in Bank Scheme

Standard Chartered bank 'in $250bn scheme with Iran'

Standard Chartered bank 'in $250bn scheme with Iran'

Standard Chartered has been accused of undermining US sanctions against Iran

Standard Chartered bank illegally "schemed" with Iran to launder as much as $250bn (£161bn) for nearly a decade, a US regulator says.

The New York State Department of Financial Services said that the bank hid 60,000 secret transactions for "Iranian financial institutions" that were subject to US economic sanctions.

It labelled UK-based Standard Chartered a "rogue institution".

The bank has been threatened with having its US banking licence revoked.

The allegations are far larger than those involving HSBC, which was recently accused by the US Senate of failing to prevent money laundering from countries around the world including Mexico and Iran. It has set aside $700m to deal with any fines and penalties arising from those allegations.

The bank is ordered to appear before the regulator soon to "explain these apparent violations of law" from 2001 to 2010.

The regulator also said that it would hold a formal hearing over the "assessment of monetary penalties".

Other schemes found
The regulator also said it had uncovered evidence with respect to what are apparently similar schemes to conduct business with other countries under sanctions - Libya, Burma and Sudan.

"Investigation of these additional matters is ongoing," it added.

The regulator said that its nine-month probe, which involved looking through more than 30,000 pages of documents, including internal Standard Chartered Bank (SCB) emails, showed that the bank reaped "hundreds of millions of dollars in fees".

"SCB's actions left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity," it said.

The bank was also accused of falsifying SWIFT wire payment directions by stripping the message of unwanted data that showed the clients were Iranian, replacing it with false entries.

Senior management were also said to have codified their illegal procedures in formal operating manuals, including one labelled "Quality Operating Procedure Iranian Bank Processing".

"It provided step-by-step wire stripping instructions for any payment messages containing information that would identify Iranian clients," the complaint said.

The US-dollar transactions in question originated and terminated in European banks in the UK and the Middle East, and were cleared through its New York branch, the complaint said.

Iran has been subject to US economic sanctions since 1979, and the laws were toughened by Executive Orders signed by President Bill Clinton in 1995 over US dollar transactions with Iran.

Among the violations of the law, the bank is accused of:

  • falsifying business records

  • failing to maintain accurate books and records

  • failing to report misconduct to the regulator in a timely manner

  • evading Federal sanctions

    In the 27-page complaint, the New York State Department of Financial Services said that Standard Chartered showed "obvious contempt for US banking regulations" and pointed to an email reply from a bank executive director to a New York branch officer.

    "Who are you [Americans] to tell us, the rest of the world, that we're not going to deal with Iranians," the complaint quotes the director as saying.

    Standard Chartered said: "The group is conducting a review of its historical US sanctions compliance and is discussing that review with US enforcement agencies and regulators.

    "The group cannot predict when this review and these discussions will be completed or what the outcome will be."
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