Lenders in the dock: past bank scandals



HSBC (LSE: HSBA.L - news) faces a final bill of $1.5bn (£937m) for the “shameful and embarrassing” US money-laundering scandal that has engulfed the lender. Here are a few other banks that have been fined because they violated US sanctions.


HSBC stands accused of leaving America’s financial system exposed to Mexican drug cartels and rogue nations such as Iran and Sudan , by failing to enforce US anti money-laundering laws.

HSBC was forced to issue a public apology in July over its role in facilitating a multi-billion-dollar money-laundering operation .

Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations, described the bank as being "pervasively polluted for a long time," as an investigation by US authorities found that HSBC accepted more than $15bn in cash between 2006 and 2009, much of it thought to be connected to Mexcian and Russian drug gangs and terrorists.

The Senate committee said HSBC had failed to properly monitor these transactions.

HSBC chief Stuart Gulliver said in July that the bank had put aside $700m (£444m) to cover the cost of the “shameful and embarrassing” scandal , but admitted the number could be “significantly larger”.

On Monday, HSBC confirmed that it had more than doubled the amount of money set aside to pay fines in the US from $700m to $1.5bn

= Standard Chartered (Other OTC: SCBFF.PK - news) =

In August, Standard Chartered was been accused by US regulators of "schem[ing]" to bypass anti-money laundering sanctions and process $250bn (£160bn) of transactions on behalf of Iranian clients .

In a damning 27 page order , the New York State Department of Financial Services (DFS) accused the bank of leaving the US "vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes”.

The watchdog then called on the lender to explain the apparent violations and demonstrate why it should not be banned from Wall Street.

Standard Chartered on Tuesday strongly rejected the allegations , and said that the DFS did not portray "a full and accurate picture of the facts".

The bank also insisted that "99.9pc of the transactions" complied with regulations.

= Credit Suisse (NYSEArca: CSMA - news) =

In 2010, Credit Suisse agreed to a $536m settlement over "egregious violations" that saw the bank process almost 5,000 transactions from August 2003 to November (Xetra: A0Z24E - news) 2006 to the benefit of Iran.

In the US Treasury Department's settlement agreement , the Office of Foreign Assets Control (OFAC) said that during the 1990s, Credit Suisse in Zurich had starting to add internal warnings to the accounts of its Iranian bank clients. It told Credit Suisse employees:

"Do not mention the name of the Iranian bank in payment orders." Such warnings ensured that payment orders given by the Iranian banks would not be processed automatically, but rather would be manually reviewed and effected by Credit Suisse employees. Between 2000 and 2004, the Iran Desk of Credit Suisse provided similar instructions to its Iranian bank clients via a standard letter, which stated in part: "The most important issue is that you and/or your correspondents do not mention your good bank's name in field 52."

The OFAC added that Credit Suisse had engaged in a "systemic pattern of conduct giving rise to apparent violations of OFAC sanctions involving Iran, Sudan, Libya, Burma, Cuba and the former Liberian Regime of Charles Taylor".

= ING =

In June, Dutch bank ING agreed to pay a record fine of $619m (£397m) to settle charges that violated US sanctions by secretly moving billions of dollars through the US financial system on behalf of Cuban and Iranian customers.

The US Department of Justice accused ING of helping to "provide state sponsors of terror and other sanctioned entities with access to the U.S. financial system, allowing them to move billions of dollars through US banks for illicit purchases and other activities".

It said ING had intentionally manipulated financial and trade transactions to remove references to Iran, Cuba and other sanctioned countries and entities "on more than 20,000 occasions".

Jan Hommen, CEO of ING Group, described the violations as "serious and unacceptable" . The bank also said that it had terminated relationships with sanctioned banks, closed its Cuban arm in 2007, and liquidated its 50pc stake in the Netherlands Caribbean Bank in 2009.

= Lloyds Banking Group (LSE: LLOY.L - news) =

In 2009, Lloyds TSB agreed to pay a $350m fine to US regulators over transactions illegally conducted on behalf of customers from Iran and Sudan that spanned a period of more than a decade.

The US Department of Justice said :

According to court documents, beginning as early as 1995 and continuing until January 2007, Lloyds, in both the United Kingdom and Dubai, falsified outgoing US wire transfers that involved countries or persons on U.S. sanctions lists. Specifically, according to court documents, Lloyds deliberately removed material information—such as customer names, bank names and addresses—from payment messages so that the wire transfers would pass undetected through filters at U.S. financial institutions. This process of "repairing" or "stripping," as Lloyds commonly referred to it, allowed more than $350 million in transactions to be processed by U.S. correspondent banks used by Lloyds that might have otherwise been blocked or rejected due to sanctions regulations or for internal bank policy reasons. According to court documents, the criminal conduct by Lloyds was designed to evade, and to assist its customers in evading, U.S. economic sanctions imposed against Iran, Sudan and other countries.

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