StanChart Liable to U.A.E. Prosecutions After Closing AccountsArif Sharif
Standard Chartered Plc’s unit in the United Arab Emirates may face legal challenges after the bank’s London-based parent agreed to close some accounts as part of an agreement with New York’s banking regulator.
StanChart “will be liable to prosecution by these companies and their owners because of the material and moral damage,” resulting from the closures, the central bank said today in an e-mailed statement. The U.A.E. central bank’s consumer protection unit would be willing to receive and consider complaints from those affected, the regulator said.
Anti-money laundering controls, added as part of Standard Chartered’s 2012 settlement with the New York regulator, were faulty and meant it missed potentially high-risk transactions, many of which originated in Hong Kong and U.A.E. branches, the New York Department of Financial Services said yesterday. The bank has been under the scrutiny of an independent monitor imposed to ensure compliance with sanctions and money-laundering drawn up by the New York regulator two years ago.
Standard Chartered yesterday agreed to pay $300 million for failing to flag suspicious transactions, as required under a 2012 settlement with New York’s top banking regulator.
Many of the accounts relate “to persons and companies holding nationalities that cannot transfer funds or deals in U.S. dollars as per U.S. law,” the U.A.E. central bank said in the statement. “The central bank formed a team to review the records of accounts of these companies and their owners, to identify the violation as recorded in New York.”
Standard Chartered is required to enhance monitoring of certain small and medium sized enterprise clients in the U.A.E. as part of the measures it needs to undertake, it said in a statement yesterday. The bank is exiting most of its SME business in the U.A.E. to sharpen its strategic focus, it said.