Regulation

StanChart agrees to pay $1 billion for violating US sanctions

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The US Justice Department said that a bank employee who worked in the UAE pleaded guilty to sanctions violations and an Iranian customer was charged in absentia.

Wednesday 10, April 2019

(Bloomberg) --Standard Chartered has agreed to pay more than $1 billion to resolve a long-running investigation into its handling of transactions that violated economic sanctions, a penalty whose severity reflects the London-based lender’s repeated violation of US sanctions on Iran.

As part of the settlement, which also included the UK’s markets regulator, the bank’s existing deferred-prosecution agreement with the Justice Department over similar conduct was extended by two years.

The case against Standard Chartered is unusual in that the bank initially settled with US authorities in 2012, paying $667 million over its handling of transactions involving Iran from 2001 to 2007. While under a two-year deferred-prosecution agreement with the Justice Department, the bank revealed that it conducted other transactions for Iranian clients after the 2007 period that were not uncovered during the earlier investigation.

More than four years were added to that deferred-prosecution agreement as investigators scrutinised the bank and whether any individuals should be charged. The authorities examined payments handled by the bank’s Dubai-based unit for shell companies in the UAE that were trading with Iranian counterparts through the bank.

Standard Chartered admitted in the latest settlement that it processed hundreds of millions of dollars in clearing transactions between 2008 and 2014 through its Dubai offices on behalf of Iranian entities as well as clients connected to other countries subject to US sanctions laws. The bank said in February it had reserved $900 million to cover costs of the settlement.

The UK’s Financial Conduct Authority said its investigation had found a series of shortcomings in the lender’s financial crime controls, including one instance when an account was opened in a UAE branch for an unidentified consulate with a suitcase containing just over $653,050 in cash in the local currency. The regulator said the bank did not properly check the source of the money.

In a written statement, Standard Chartered said that it accepted full responsibility for the violations of US sanctions and that the issues were related to the actions of two former junior employees who were aware of certain customers’ Iranian connections and conspired with them to break the law, deceive the group and violate its policies.

“The circumstances that led to today’s resolutions are completely unacceptable and not representative of the Standard Chartered that I am proud to lead today,” said Bill Winters, Group Chief Executive Officer of StanChart.

In addition to the Justice Department and the New York bank regulator, US regulators participating in the agreement include the Treasury Department’s Office of Foreign Assets Control, the Federal Reserve and the Manhattan district attorney’s office. The UK’s Financial Conduct Authority imposed a civil penalty of $133 million.

TAGS : Standard Chartered, US sanctions violation , Iran transaction , US Justice Department, UK Financial Conduct Authority, Bill Winters, New York bank regulator

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