Standard Chartered Pays $327 Million on U.S.-Iran Transfers
Standard Chartered Plc (STAN), Britain’s second-largest bank by market value, agreed to pay $327 million of fines, in line with the bank’s forecast, after regulators alleged it violated U.S. sanctions with Iran.
After paying a $340 million settlement in August to New York’s Department of Financial Services, the London-based company told investors on Dec. 6 it expected to pay about $330 million on Dec. 6 to resolve other investigations.
The bank will pay $100 million to the Federal Reserve and $227 million to the U.S. Department of Justice and the District Attorney for New York County. The settlement includes a $132 million fine to the Treasury Department’s Office of Foreign Assets Control, according to a statement from the Federal Reserve today.
“The orders address unsafe and unsound practices related to inadequate and incomplete responses to examiner inquiries as well as insufficient oversight of its compliance program for U.S. economic sanctions, Bank Secrecy Act, and anti-money- laundering requirements,” the Fed said in the statement.
Standard Chartered in August was accused by Benjamin Lawsky, head of the New York Department of Financial Services, of helping Iran launder about $250 billion in violation of federal laws, keeping false records and handling lucrative wire transfers for Iranian clients. The bank sent them through its New York unit in so-called U-turn transactions with client names omitted to hide their provenance, Lawsky said. The bank settled the probe on Aug. 14, a day before it was due to defend itself to the regulator.
Today’s announcement “draws a line under the situation,” said Gary Greenwood, a banking analyst at Shore Capital Ltd. with a buy rating on the stock. “The company has continued to perform over the period.”
Standard Chartered rose 12 pence, or 0.8 percent, to 1,497.5 pence in London, valuing the lender at 36.1 billion pounds ($58 billion). The bank has risen 6.3 percent this year.
The company will pay the sum in the second half of this year, it said today in a statement. “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,” it said.
Standard Chartered entered into a deferred prosecution agreement with the U.S. Justice Department whereby it will forfeit $227 million of funds tied to the illegal transactions, according to court records filed in the federal court in Washington.
As part of that agreement, the U.S. charged the bank with one count conspiring to violate the International Emergency Economic Powers Act. That charge will be dismissed after two years if Standard Chartered abides by the terms of the agreement, according to court papers.
“When banks dodge U.S. sanctions laws, they imperil our financial system and our national security,” U.S. Attorney Ronald Machen said in an e-mailed statement. “Today’s agreement holds Standard Chartered Bank accountable for intentionally manipulating transactions to remove references to Iran, Sudan, and other sanctioned entities, and then further concealing these transactions through misrepresentations to U.S. regulators.”
The New York settlement amount was the largest ever paid to an individual regulator as part of a money-laundering accord. In June, ING Groep NV agreed to pay $619 million to settle similar allegations. That sum was split evenly between the federal government and the Manhattan district attorney’s office.
HSBC Holdings Plc (HSBA) said on Nov. 5 it’s likely to face criminal charges from U.S. anti-money-laundering probes and the cost of a settlement may “significantly” exceed the $1.5 billion the bank has set aside.
HSBC has been in talks with U.S. regulators over allegations it laundered funds of sanctioned nations including Iran and Sudan. The probes prompted Standard & Poor’s to question whether the lender, Europe’s largest by market value, is too big to be managed effectively.
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