IN 2004 the following was reported about Standard Chartered – was this a warning? Bank ‘is tightening its checks’ – THE bank investigated for possible breaches of international sanctions has satisfied the Island’s regulator that it is improving controls.

In March last year [2003] the Jersey branch of multinational finance firm Standard Chartered was ordered by the Jersey Financial Services Commission to initiate and pay for a report carried out by accountants Ernst & Young.

The inquiry under Article 25 of the Banking Business Law probed weaknesses in anti-money-laundering procedures at the bank, particularly account opening and management.

The investigation looked into a sample of accounts opened both before July 1999 – when the Proceeds of Crime Law came into effect – and after that date.

The JFSC press release says it ‘identified a number of weaknesses’ in policies and procedures, resulting in ‘a plan for improvements’.

According to The Mail on Sunday – which had access to a leaked copy of the Ernst & Young report – those weaknesses included more than 70 Iraqi-linked accounts, with over £4 million paid out in possible breach of international sanctions, and accounts held for two supporters of the Mugabe regime who were on international blacklists.

According to the report, only 2,200 of 16,000 account holders had been fully checked.

Standard Chartered ‘recognised that its anti-money-laundering procedures required material improvement,’ says the JFSC, and subsequently and on its own behalf commissioned Ernst & Young to produce a second report.

This has now been presented to the bank and the commission and ‘confirms that much progress has been made’.

Paul Walkden, managing director of Standard Chartered (Jersey) Ltd, said that the bank was pleased that the review had been concluded.

He said two issues were still outstanding, involving changes to IT systems.

‘We believe we have adequate controls already in place, but these changes will enhance our procedures,’ said Mr Walkden.

‘We have taken these issues very seriously.

It has taken up a lot of management resources and financial resources.

The commission statement concluded that the senior management of the bank and its parent company had shown ‘a strong commitment’ to implementing this action.

‘There will be further liaison between the bank and the commission to confirm full implementation of the necessary measures,’ it added.

http://www.thisisjersey.com/latest/2004/11/05/bank-is-tightening-its-checks/