Standard Chartered PLC (LON:STAN) (LON:STAC) has been hit with a $300 million fine by the New York Department of Financial Services (DFS) for failing to fully implement the anti-money laundering transaction surveillance system that it agreed to as part of a 2012 settlement.
London-based Standard Chartered PLC (LON:STAN) (LON:STAC), which does most of its business in Africa, Asia, and the Middle East, was accused of having laundered $250 billion for the Central Bank of Iran, Bank Melli, Bank Saderat, and other Iranian entities by the DFS two years ago and agreed to pay $340 million in fines in addition to beefing up the transaction surveillance system in its New York office to flag high risk transactions in the future. The $327 million settlement that the bank reached with the Federal Reserve, the Department of Justice, and other regulators brought the tally up to $667 million at the time.
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But now the DFS says that a number of high-risk transactions in Standard Chartered PLC (LON:STAN) (LON:STAC)’s UAE and Hong Kong offices that should have been flagged for review are passing by through the transaction surveillance system. Just to be clear, the DFS has not alleged that any new illegal transactions have taken place.
“The SCB Monitor determined that SCB’s Rulebook was not consistent with the majority of the actual detection scenarios, and such detection scenarios contained errors or were incomplete resulting in the SCB NY transaction monitoring system failing to detect a significant number of potentially high-risk transactions for further review,” says the DFS order.
If you count the additional $300 million in with the rest of the fines, Standard Chartered PLC (LON:STAN) (LON:STAC) has paid just under $1 billion to US regulators over the money laundering charges.
Standard Chartered monitoring extended by two years
In addition to the civil penalty, Standard Chartered PLC (LON:STAN) (LON:STAC) has 30 days to write up a ‘remediation action plan’ to correct its transaction monitoring system and submit to the DFS. It also has to appoint an executive who reports directly to the CEO in charge of monitoring remediation, and the SCB Monitor’s engagement with Standard Chartered has been extended for another two years.
Standard Chartered PLC (LON:STAN) (LON:STAC) will also have to deal with more limitations on its business, including restrictions on opening new USD denominated demand accounts and restrictions on USD clearing services in Hong Kong and the UAE.