Standard Chartered fined $1.1bn over Iran links — including suitcase full of cash
Standard Chartered (STAN.L) has been fined a huge $1.1bn (£843m) by regulators in the US and the UK for failing to ensure customers weren’t laundering cash or using money for illegal activities, such as terrorism or arms dealing.
The emerging markets-focused bank announced on Tuesday that it will pay $1.1bn to settle probes by the Financial Conduct Authority (FCA) in the UK, as well as US agencies including the US Department of Justice. StanChart will pay $947m to the US agencies and £102m to the FCA.
The blockbuster fines relate to failings at the bank around anti-money laundering controls and sanctions, largely related to dealings with Iran.
“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,” US assistant attorney general Brian A. Benczkowski said.
The New York Department of Financial Services (DFS) said it identified at least $600m that was processed by StanChart’s London and Dubai offices and may have been connected to Iran. It said StanChart compliance officers “utterly failed to take steps to ensure that transactions from Iran were blocked.”
These failings were uncovered during a separate investigation into StanChart’s handling of $150m-worth of business for a sanctioned Iranian petrochemical company.
As well as failing to prevent Iranian money flows, the investigation also found that a StanChart manager “advised an Iranian front company located in Dubai how to evade detection by changing its corporate name and then opening a new account.” Another Dubai manager took money from a sanctioned Iranian company to buy themselves a car.
“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,” DFS acting superintendent Linda Lacewell said in a statement.
“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.
StanChart also failed “to collect sufficient information on a customer exporting a commercial product which could, potentially, have a military application,” the FCA said.
“Standard Chartered’s oversight of its financial crime controls was narrow, slow, and reactive,” Mark Steward, director of enforcement and market oversight at the FCA, said.
“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.
“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.”
“We are pleased to have resolved these matters and to put these historical issues behind us,” Bill Winters, Standard Chartered group chief executive, said.
“The circumstances that led to today’s resolutions are completely unacceptable and not representative of the Standard Chartered I am proud to lead today.
“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.”