On Monday, the New York State Department of Financial Services called Standard Chartered bank a “rogue institution” and said that the bank had “schemed” with the Iran government to hide 60,000 transactions from law-enforcement officials. The secret transactions are more than $250 billion in value and could have generated hundreds of millions of dollars in fees. The authorities also alleged that by its acts the Standard Chartered bank had exposed the U.S. banking system to terrorists, drug traffickers, and corrupt states.
The regulator also described how bank officials dilly-dallied and dragged their feet over deciding to support sanctions on Iran or continue to deal with it. The regulator mentioned that in October 2006, one of the top officials of the foreign bank in America had sent a “panicked message” that the continued dealings with Iran could cause “catastrophic reputational damage” and “serious criminal liability.”
In an answer to the panicked official in their U.S. office, a Standard Chartered top official wrote back from UK: “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 regulator mentioned that the reply by the Standard Chartered top brass in England showed an “obvious contempt for U.S. banking regulations.”
The regulating authorities are thinking of taking away Standard Chartered’s license to act as a bank in New York State and cut it off from direct access to the U.S. bank market.
Standard Chartered is the third British bank caught by U.S. law-enforcement of trying to fool the U.S. banking regulation system this summer. Earlier, Barclays Plc settled its U.S. and UK probes into rigging global benchmark with a hefty settlement of $453 million. In July, the U.S. Senate panel issued a report criticizing the acts of HSBC involved in police suspect transactions and dealings with Mexican drug traffickers.
A spokesman for the Standard Chartered bank said that the bank “is conducting a review of its historical U.S. sanctions compliance and is discussing that review with U.S. enforcement agencies and regulators. The group cannot predict when this review and these discussions will be completed or what the outcome will be.”
The order by the regulatory authorities found that Standard Chartered removed codes on money transfers and altered message fields, inserting phrases such as “NO NAME GIVEN” to hide the nature of transactions.
Amidst reports of the U.S. probe, Standard Chartered’s stock fell 8% in the final 15 minutes of trading in London.