NEW YORK - (Mealey's) Standard Chartered Bank will pay $340 million to settle claims that it conspired with Iranian government-backed banks and covered up nearly 60,000 "secret transactions" totaling over $250 billion with the banks, which were subject to U.S. government sanctions, according to a statement issued Aug. 14 by New York Department of Financial Services (DFS) Superintendent Benjamin M. Lawsky (In the Matter of Standard Chartered Bank, New York Branch, N.Y. D.F.S.).
As part of the settlement, Lawsky said, Standard Chartered will pay the $340 million to the DFS and will "install a monitor for a term of at least two years who will report directly to DFS and who will evaluate the money-laundering risk controls in the New York branch and implementation of appropriate corrective measures. In addition, DFC examiners shall be placed on site at the Bank."
Lawsky also said Standard Chartered will "permanently install personnel within its New York branch to oversee and audit any offshore money-laundering due diligence and monitoring undertaken by the Bank."
A hearing regarding the DFS's investigation regarding the scheme, originally scheduled for Aug. 15, was adjourned as part of the settlement agreement.
In its statement regarding the settlement, Standard Chartered referred to Lawsky's official statement but said that "[d]iscussions continue around a settlement including a payment of $340 [million]. A formal agreement containing the detailed terms of the settlement is expected to be concluded shortly."
"The Group continues to engage constructively with the other relevant US authorities. The timing of any resolution will be communicated in due course," the bank said in its statement.
Aug. 6 Order
Lawsky issued an order on Aug. 6 alleging that Standard Chartered's New York branch "programmatically engaged in deceptive and fraudulent misconduct in order to move at least $250 billion through its New York branch on behalf of client Iranian financial institutions that were subject to U.S. economic sanctions, and then covered up its transgressions. These institutions included no less than the Central Bank of Iran/Markazi, as well as Bank Saderat and Bank Melli, both of which are also Iranian State-owned institutions."
In particular, Lawsky contends that Standard Chartered undertook a course of conduct that included falsifying business records, offering false instruments for filing, failing to maintain accurate books and records of all transactions effected and all actions taken on behalf of Standard Chartered, obstructing governmental administration, failing to report misconduct to the department in a timely manner, evading federal sanctions and "numerous other violations of law that, as with the above, have an impact upon the safety and soundness of SCB's [Standard Chartered Bank] New York branch and the Department's confidence in SCB's character, credibility and fitness as a financial institution licensed to conduct business under the laws of this State."
Lawsky ordered Standard Chartered to appear at the Aug. 15 hearing to: "(1) appear and explain apparent violations of law; (2) demonstrate why SCB's license to operate in the State of New York should not be revoked; (3) demonstrate why SCB's U.S. dollar clearing operations should not be suspended pending a formal license revocation hearing; and (4) submit to and pay for an independent, on-premises monitor of the Department's selection to ensure compliance with rules governing the international transfer of funds."
Claims were made under New York law for failure to maintain accurate books and records, obstructing governmental administration, failure to report crimes and misconduct, falsification of books and reports, offering false instrument for filing, falsification of business records and unauthorized Iranian transactions.
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