Bank settles Iran money probe in NY for $340M
Tuesday, August 14, 2012
ALBANY, N.Y. (AP) — The state's financial regulator said Tuesday his agency has reached a $340 million settlement with Standard Chartered Bank to resolve an investigation into whether the British bank schemed with the Iranian government to launder $250 billion from 2001 to 2007.
The bank will pay the civil penalty to the state and will strengthen oversight of overseas transactions, state Department of Financial Services Superintendent Benjamin Lawsky said.
Standard Chartered spokeswoman Julie Gibson noted the New York announcement set out the terms of an agreement, including payment of $340 million, and a formal agreement with details is expected shortly.
Standard Charter will install for at least two years a monitor who will evaluate the money laundering risk controls of its New York branch and take corrective measures, Lawsky said. It also will permanently install personnel to oversee and audit offshore money laundering monitoring, the agency said, and agency examiners will be placed at the bank.
A department hearing on the issue scheduled for Wednesday in New York City has been adjourned. The date for the civil payment, which will go to the state's general fund, has not been set.
Federal Reserve spokeswoman Barbara Hagenbaugh said the Fed "continues to work with the other agencies on a comprehensive resolution."
The U.S. imposes financial sanctions on political enemies to hinder their access to the global financial system. The goal is to choke off banks and other sources of capital, limiting their economic growth and their ability to buy weapons, food and other items available through global trade. Sanctions ensure that U.S. banks don't get involved.
Several other non-U.S. banks with operations in the United States have settled sanctions cases with U.S. authorities in recent years. Dutch bank ING Bank NV agreed in June to pay $619 million to settle charges that it secretly moved billions of dollars through the U.S. financial system on behalf of Iranian and Cuban customers.
Manhattan District Attorney Cyrus Vance has been investigating Standard Chartered, with federal partners, for more than a year. His office declined to comment on the settlement.
Gov. Andrew Cuomo said the result showed the effectiveness of the state's recently formed Department of Financial Services, which combined banking and insurance regulation in one agency.
"This state and nation are still paying the price for a failed regulatory system, and that must not happen again," he said.
Standard Chartered Bank said Monday it "strongly rejects" and "contests" the New York regulators' portrayal of its transactions with Iranian banks.
Lawsky earlier had signed an order that required the London-based bank to answer his questions following an investigation into the practice of removing crucial identifiers in financial transactions, called wire stripping.
The state agency called the bank a rogue institution and quoted one of its executives as saying: "You (expletive) Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians."
The bank conspired with its Iranian clients to route nearly 60,000 U.S. dollar payments through its New York branch "after first stripping information from wire transfer messages used to identify sanctioned countries, individuals and entities," according to the agency's order.
The order said the transactions provided the bank with millions of dollars in fees when such trade was restricted. Lawsky said the scheme left the U.S. financial system "vulnerable to terrorists."
The bank statement said "well over 99.9 percent" of the questioned transactions with Iran complied with all regulations and the few transactions that didn't amounted to $14 million. It said none of its Iranian payments was on behalf of any designated terrorist group.
Associated Press Business Writer Marcy Gordon in Washington, D.C., contributed to this report.
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