The British bank Standard Chartered will pay another large fine to New York’s financial regulator, the Department of Financial Services.
The regulator announced Tuesday that the bank, headquartered in London but with the lion’s share of its business done overseas, would pay a $300 million penalty, end dollar transactions for its Hong Kong subsidiary, and abandon some client relationships in the United Arab Emirates.
The penalty follows a $340 million settlement the bank reached with DFS in 2012, when the Department’s head, Benjamin Lawsky, threatened to pull the bank’s charter to operate in the United States over allegations that it did business with individuals and businesses in Iran in violation of U.S. sanctions.
DFS claimed that Standard Chartered had hidden some 60,000 transactions worth $250 billion from the U.S. government by stripping out the identities of its Iranian clients. As part of the deal, DFS installed a monitor to ensure the bank’s ongoing compliance with anti-money laundering rules for two years.
That monitor found that Standard Chartered was not properly flagging “high risk” transactions from subsidiaries based in Hong Kong and the UAE. The monitor also found that Standard Chartered’s own procedures for detecting these transactions “contained numerous errors and other problems,” according to DFS.
The bank hinted that a new fine would be coming from Lawsky’s office earlier this month, when it said that “certain issues have been identified with respect to
the Group’s post-transaction surveillance system” and that it was expecting “a monetary penalty and remedial actions.”
As part of the settlement, Standard Chartered will have to implement a new system for monitoring transactions and the outside monitor will stay for another two years. The bank must also get DFS approval for opening dollar accounts for customers of its New York subsidiary.
“If a bank fails to live up to its commitments, there should be consequences. That is particularly true in an area as serious as anti-money-laundering compliance, which is vital to helping prevent terrorism and vile human rights abuses,” Lawsky said in a statement.
The penalty for Standard Chartered is part of a long effort on the part of DFS, which was founded in 2011, and its head Ben Lawsky, to crack down on foreign banks in New York avoiding U.S. sanctions. Lawksy also fined Royal Bank of Scotland $100 million for doing over $500 million in transactions with companies and individuals in Iran, Sudan, and other sanctioned countries, and was one of the many agencies investigating the French bank BNP Paribas for its dealings with Sudan.
The BNP Paribas investigation ended with a $9 billion payout, mostly in the form of a civil penalty imposed by the Justice Department, as well as a temporary dollar clearing ban imposed by DFS.
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