Standard Chartered has been imposed with a massive fine amounting to $1.1bn by regulators in both the United Kingdom and the United States of America for failing to ensure that customers were not laundering cash or use the ng money for illegal activities, such as arms dealing or terrorism.
Today, the emerging markets-focused bank announced that it will be paying $1.1bn to settle the investigation conducted by the Financial Conduct Authority (FCA) in the United Kingdom, as well as some agencies in the United States including the US Department of Justice. StanChart will be paying £102m to the FCA and $947m to the US agencies.
The record-breaking fines are linked to failings at the bank around anti-money laundering sanctions and controls, largely related to dealings with Iran.
Brian A. Benczkowski, the US assistant attorney general, stated: “Today’s resolution sends a clear message to financial institutions and their employees: If you circumvent US sanctions against rogue states like Iran — or assist those who do — you will pay a steep price.”
The New York Department of Financial Services (DFS) said that it identified at least $600m that was processed by the London and Dubai offices of StanChart that may have been linked to Iran. It said that the compliance officers of StanChart “utterly failed to take steps to ensure that transactions from Iran were blocked.”
These failings were discovered during a separate probe into the handling of StanChart of $150m-worth of business for a sanctioned petrochemical company in Iran.
As well as failing to block Iranian money flows, the probe also discovered that a manager of StanChart “advised an Iranian front company located in Dubai how to evade detection by changing its corporate name and then opening a new account.” Another manager in Dubai took money from a sanctioned Iranian firm to buy themselves a car.
In a statement, Linda Lacewell, the DFS acting superintendent, stated: “While Standard Chartered has taken significant remedial measures since 2014 to develop a more robust program to prevent these egregious activities, the time has come for the bank to finish the job.”
She added: “DFS will take whatever measures necessary to ensure that the bank lives up to its word and maintains effective safeguards against sanctions violations and money laundering.”
The FCA also detailed “serious and sustained shortcomings” at StanChart. These included “opening an account with 3m UAE Dirham in cash in a suitcase with little evidence that the origin of the funds had been investigated.” That’s just over £500,000 or $800,000.
The FCA said that StanChart was also not able “to collect sufficient information on a customer exporting a commercial product which could, potentially, have a military application.”
The director of enforcement and market oversight at the FCA, Mark Steward, disclosed: “Standard Chartered’s oversight of its financial crime controls was narrow, slow, and reactive.”
He added: “These breaches are especially serious because they occurred against a backdrop of heightened awareness within the broader, global community, as well as within the bank, and after receiving specific attention from the FCA, US agencies, and other global bodies about these risks.”
“The Group accepts full responsibility for the violations and control deficiencies outlined in the resolution documents, the vast majority of which predated 2012 and none of which occurred after 2014,” Standard Chartered said in a statement.
He continued: “These violations include 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. Such behaviour is wholly unacceptable to the Group.”
The Standard Chartered group chief executive, Bill Winters, stated: “We are pleased to have resolved these matters and to put these historical issues behind us.”
He added: “The circumstances that led to today’s resolutions are completely unacceptable and not representative of the Standard Chartered I am proud to lead today.
He continued: “Fighting financial crime is central to what we do and who we are; we do not tolerate misconduct or lax controls and we will continue to root out any issues that threaten the trust we have built over more than 160 years.”