Standard Chartered Fined $340 million in Money Laundering Probe


Standard Chartered Bank has agreed to a $340 million settlement with the New York State Department of Financial Services that accused it of hiding $250 billion of illicit transactions with Iran.

State Department of Financial Services Superintendent Benjamin Lawsky said Tuesday that Standard Chartered Bank will pay the civil penalty to the state and will additionally strengthen oversight of overseas transactions.

A department hearing on the issue scheduled for Wednesday in New York City has been adjourned. The date for the civil payment, which will go to the state's general fund, has not been set.

Standard Chartered’s shares rose as much as 6.8 percent in Hong Kong after the announcement was made, though it is still nearly 6 percent lower than before the allegations hit the bank early last week.

Related News: Standard Chartered Accused of Hiding $250 Billion in Iranian Transactions

New York’s DFS had alleged last week that the US unit of Standard Chartered Bank had illegally concealed 60,000 transactions with Iran worth $250 billion over nearly a decade.

The state agency had also called the bank a rogue institution for breaking US sanctions against Iran and had threatened to revoke the bank’s operating license.

In publicly released documents, a Standard Chartered executive was quoted saying: “You f---ing Americans.  Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?”

Hugh Young, Asia managing director at Aberdeen Asset Management, Standard Chartered’s third-biggest shareholder, welcomed the swift resolution. He told Reuters:

Standard Chartered has probably done the right thing. You just pay up and get on with life however innocent you feel you are. Otherwise, it's something that could hang over you for years.

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Calling it a “pragmatic decision” that was in the “best interest of shareholders and customers,” Standard Chartered confirmed the deal and said it continues to “engage constructively with the other relevant US authorities.”

Lawsky’s allegations had come as a surprise, the bank said, hitting its share price and bringing top executives bank to London from their summer vacations. Bank of England Governor Sir Mervyn King said Lawsky’s aggressive stance was out of step with other US authorities.

Despite the embarrassing scandal, Ian Gordon, analyst at Investec Securities in London, said the risks of further regulatory costs “appear sufficiently contained”. He added:

Standard Chartered’s management team has conducted themselves admirably in the face of extreme provocation.

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However, extreme provocation or otherwise, the bank still faces federal inquires after its New York settlement.

According to Bloomberg, “regulators including the US Treasury, Federal Reserve, Justice Department, and Manhattan District Attorney declined attempts at a global settlement” adding that “a coordinated effort was already in progress before New York’s unilateral deal” was announced.

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