US regulator claims Standard Chartered laundered Iranian money – Standard Chartered Bank has lost a quarter of its value and has been threatened with losing its licence to practice in the US after the New York financial regulator accused it of laundering Iranian funds illegally.
According to the New York State Department of Financial Services (DFS), the UK-based Standard Chartered Bank has laundered as much as US$250bn (£161bn) over nearly a decade.
It said the bank hid 60,000 transactions for “Iranian financial institutions” that were subject to US economic sanctions.
Standard Chartered denies the allegations, saying that it “strongly rejects the position or portrayal of facts as set out in the order” issued by the regulator, adding that the bank “ceased all new business with Iranian customers in any currency over five years ago”.
The US regulator has labelled UK-based Standard Chartered a “rogue institution” and ordered the bank to “explain these apparent violations of law” from 2001 to 2010.
It has also accused Standard Chartered of falsifying payment directions by stripping the message of unwanted data that showed the clients were Iranian, replacing it with false entries.
The DFS says that the bank’s senior managers were aware of the extent of the bank’s activities and that, by 2006, even the New York branch was acutely concerned about the bank’s Iran dollar-clearing programme.
According to the regulator, in October 2006, Standard Chartered’s CEO for the Americas sent a “panicked” message to the group executive director in London.
“Firstly,” he wrote, “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.”
His plea to the home office continued: “[s]econdly, there is equally importantly potential of risk of subjecting management in US and London (eg, you and I) and elsewhere to personal reputational damages and/or serious criminal liability.”
The DFS statement adds that Standard Chartered’s “obvious contempt” for US banking regulations was “succinctly and unambiguously communicated” in the bank’s group executive director’s alleged response: “You f—ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians”.
The DFS says that it has also uncovered evidence of similar schemes used to conduct business with other countries under sanctions, namely Libya, Burma and Sudan. “Investigation of these additional matters is ongoing,” it added.
The bank, which currently only operates in the US in New York, has been threatened with having its New York banking licence revoked.
Consultancy firm Deloitte has also come under fire after the US regulator suggested that it may have aided Standard Chartered in its alleged deception.
Deloitte had “intentionally omitted critical information” in a report, it said.
Deloitte says the allegations are “unsupported by the facts”.
The regulator said that its nine-month investigation, which involved looking through more than 30,000 pages of documents, including internal bank emails, showed that the bank reaped “hundreds of millions of dollars in fees”.
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; and evading federal sanctions.
The US Treasury, which implements the sanctions, said that it treated violations “extremely seriously”.
To download a copy of the New York State Department of Financial Services’ allegations in full, click here.
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