Standard Chartered (STAN:LN) will pay $327 million to settle federal and New York charges it laundered money on behalf of four sanctioned nations between 2001 and 2007. The US Treasury’s Office of Foreign Assets Control announced Dec. 10 will conclude a years-long investigation into the British bank’s currency transactions made at its New York branch for Iranian, Sudanese, Libyan and Burmese clients that were concealed from regulators. The bank has also settled with the Justice Department, the Manhattan district attorney and the Federal Reserve.
“Today’s settlement is the result of an exhaustive interagency investigation into Standard Chartered Bank’s attempts to violate U.S. sanctions programs through the ‘stripping’ from payment messages of critical information,” said OFAC Director Adam J. Szubin. “We remain committed to working with our partners in the regulatory and law enforcement community to ensure that the U.S. financial system is protected from the risks associated with this type of illicit financial behavior.”
Standard Chartered had previously consented to pay $340 million Sept. 21 to settle charges it processed wire transfers on behalf of Iranian clients. The London-based bank faced allegations from the U.S. Treasury, the Federal Reserve Bank, the Justice Department and the Manhattan district attorney, accusing it of scheming with the Iranian government to launder $250 billion from 2001 to 2007.
New York superintendent of financial services Benjamin Lawsky accused the bank of “wire stripping,” removing critical identifiers in financial transactions that would identify the sanctioned nation, when routing nearly 60,000 U.S. dollar payments through Standard Chartered’s New York branch. In fact, US officials allege Standard Chartered representatives illegally advised a customer in a sanctioned country to substitute the London bank’s code in wire payment messages in order to mask its transactions through the New York branch.
Standard Chartered denied the allegations.
“The group does not believe the order issued by the DFS presents a full and accurate picture of the facts,” the bank stated. “The analysis, that the group shared with all the U.S. agencies, demonstrates that throughout the period the group acted to comply, and overwhelmingly did comply, with U.S. sanctions and the regulations.”
U.S. officials never agreed with the bank’s point of view.
“For years, Standard Chartered Bank deliberately violated U.S. laws governing transactions involving Sudan, Iran and other countries subject to U.S. sanctions,” said Assistant U.S. Attorney General Lanny Breuer. “The United States expects a minimum standard of behavior from all financial institutions that enjoy the benefits of the U.S. financial system. Standard Chartered’s conduct was flagrant and unacceptable.”
Now Standard Chartered admits the investigation found $133 million in transactions processed for the four sanctioned countries through its New York branch. The bank says it has since upgraded its compliance procedures and no further action should be taken by U.S. regulators if it continues to meet settlement conditions—including the $327 million cash payment.
“The settlements are the product of an extensive internal investigation that led the bank voluntarily to report its findings concerning past sanctions compliance to these U.S. authorities, and nearly three years of intensive cooperation with regulators and prosecutors,” Standard Chartered said. “In the more than five years since the events giving rise to today’s settlements, the bank has completed a comprehensive review and upgrade of its compliance systems and procedures.”
