New York/London, Aug 7: The New York state has threatened to revoke Standard Chartered Bank's licence after charging the UK-based global banking giant of operating as a “rogue institution” and hiding over 60,000 transactions worth USD 250 billion with Iran.
While the bank has refuted the charges saying that more than 99.9 per cent of its Iran-related transactions complied with the US regulations, the New York State Department of Financial Services (DFS) has charged StanChart of exposing the US financial systems to terrorists, drug kingpins and weapon dealers through its transactions with Iran for about 10 years.
In a 27-page order, the Superintendent of Financial Services Benjamin Lawsky of DFS said that “grounds exist for revocation of Standard Chartered Bank's licence to operate in the State of New York and that interim measures must be taken to protect the public interest.”
The order accused Standard Chartered of operating as a “rogue institution” which was “motivated by greed.” The bank “acted for at least 10 years without any regard for the legal, reputational, and national security consequences of its flagrantly deceptive actions.
“Led by its most senior management, SCB designed and implemented an elaborate scheme by which to use its New York branch as a front for prohibited dealings with Iran - dealings that indisputably helped sustain a global threat to peace and stability,” the DFS order said.
Reacting to the regulator's order, Standard Chartered said it “strongly rejects” the position and portrayal of facts made by DFS.
The bank said that over 99.9 per cent of its Iran-related business was in compliance with the relevant regulations and total value of transactions in non-compliance was less than USD 14 million, and the bank stopped all its new businesses with Iranian clients over five years ago.
Iran figures among the countries barred by the US for doing any business by individuals and business entities.
StanChart has been ordered to appear before the Superintendent on August 15 to explain its violations of law and demonstrate as to why its licence to operate in the State of New York should not be revoked.
It has also been asked to explain as to why its US dollar clearing operations should not be suspended pending a formal licence revocation hearing.
“For almost ten years, SCB schemed with the Government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least USD 250 billion, and reaping SCB hundreds of millions of dollars in fees,” the order said.
It added, “SCB's actions left the US 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.”
SCB engaged in “deceptive and fraudulent misconduct” for nearly a decade in order to move at least 250 billion dollars through its New York branch on behalf of its Iranian clients that were subject to US economic sanctions.
In its “evident zeal” to make hundreds of millions of dollars at “any cost”, SCB falsified business records, offered false instruments for filing, failed to maintain accurate books and records of transactions and evaded US sanctions.
The regulator said any banking institution that engages in such conduct is “unsafe and unsound”.
The bank, which has significant presence across the world, has also been found to have deficient money laundering controls in its outsourcing of work to India, the DFS said after “extensive investigations” of thousands of documents.
The bank said it is conducting a review of its historical compliance and is discussing that review with US agencies, including the DFS, the Department of Justice, the Office of Foreign Assets Control and the Federal Reserve.
