British bank Standard Chartered plc is rejecting allegations of financial sanctions violations that were leveled at the bank by U.S. regulators.
The New York State Department of Financial Services (DFS) issued an order Monday after an investigation of Standard Chartered Bank (SCB) turned up what it termed, “willful and egregious violations of law” in relation to its dealings with Iran. In its order, the DFS alleged that, “For almost 10 years, SCB schemed with the government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion, and reaping SCB hundreds of millions of dollars in fees.”
It also said that the bank’s actions “left the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity.” While it initially focused on dealings with Iran, the DFS said that it has also uncovered evidence of apparently similar schemes to conduct business with other U.S. sanctioned countries, such as Libya, Myanmar and Sudan. Investigation of these matters is ongoing, it said.
The allegations have not been proven, but the regulator’s order says that it has determined that good cause exists, to direct SCB to: appear and explain apparent violations of law; demonstrate why its license to operate in New York should not be revoked; demonstrate why its U.S. dollar clearing operations should not be suspended; and, submit to an independent monitor to ensure compliance with rules governing the international transfer of funds.
Standard Chartered said Tuesday it “strongly rejects the position or the portrayal of facts” set out in the order issued by the DFS. It says that it believes the order issued by the DFS doesn’t present a full and accurate picture of the facts.
The bank maintains that its internal investigation into its compliance with US sanctions against Iran, which focused primarily on transactions relating to Iran in the period 2001-2007, found that the bank acted to comply, and overwhelmingly did comply, with US sanctions and the regulations. It says that over 99.9% of the transactions relating to Iran complied with the regulations, and that the total value of transactions which did not was less than $14 million. It also maintains that the regulator’s interpretation of the law is incorrect, and that its review didn’t turn up any payments any terrorist entity or organization.
Standard Chartered says it is engaged in ongoing discussions with the relevant US agencies, and that it was surprised to receive the order from the DFS, “given that discussions with the agencies were ongoing”.
“We intend to discuss these matters with the DFS and to contest their position,” it adds.