Standard Chartered PLC (LON:STAN) (LON:STAC) denied the allegations of the New York Department of Financial Services (DFS), that it violated the anti-money laundering laws of the United States and hid $250 billion in transaction with Iranian banks.
Benjamin Lawsky, superintendent of DF, described the bank as a “rogue institution” and threatened to revoke its license. He accused the bank of systematically hiding crucial information that would help law enforcement investigators to track criminal activities. He also said that it opened the U.S. financial system vulnerable to criminals and terrorists.
In reaction to the accusations, Standard Chartered PLC (LON:STAN) (LON:STAC) issued an official statement, and said, “The group strongly rejects the position or the portrayal of facts as set out in the order issued by the DFS.” In addition, the bank said it does not believe the order issued by the New York top regulator presents a full and accurate picture of the facts.
Furthermore, the bank cited that it voluntarily informed all relevant U.S. agencies, including the DFS, regarding its review of historical U.S. dollar transactions and its compliance with US sanction in January 2010. According to Standard Chartered, that review, which was conducted by external counsel and consultants, focused primarily on its transactions with Iran from 2001 to 2007, and its compliance with the U-turn framework established by regulators to allow on-going U.S. dollar trade with Iran and other countries.
Standard Chartered PLC (LON:STAN) (LON:STAC) emphasized the result of the review was disclosed to the authorities and 99.9 % of its transactions related to Iran complied with the u-turn regulations, and the total worth of transactions in violation of U-turn regulations was below $14 million. The bank also pointed out, “The Group takes its responsibilities very seriously, and seeks to comply at all times with relevant laws and regulations. It is in this spirit, we initiated this review and have engaged with the U.S. agencies.”
Moreover, Standard Chartered said it stopped doing transactions with new Iranian customers more than five years ago.
The DFS issued a directive to the bank to explain the alleged violations, including 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 on August 15.
Investors do not seem to like the news. Standard Chartered PLC (LON:STAN) shares are down 17% at the time of this writing.
Aside from Standard Chartered, U.S. regulators also investigated Barclays PLC (LON:BARC) (NYSE:BCS) and HSBC Holding Plc (NYSE:HBC). Barclays agreed to pay $453 billion fine to settle its case related in manipulating a global benchmark. HSBC is under investigation for its failure to prevent money laundering from other countries, particularly from Mexican drug traffickers.