SCB Iran Money Laundering Case Settled with $340 Mil Fine

[Porker]

Standard Chartered http://online.wsj.com/public/quotes/main.h...od=inlineTickerPLC agreed to pay $340 million to a New York regulator to settle allegations that the bank broke U.S. money-laundering laws in handling transactions for Iranian customers, after a weeklong, trans-Atlantic regulatory drama. Standard Chartered Chief Executive Peter A. Sands flew into New York to help negotiate the settlement, said people familiar with the bank.

 

The sum is the largest fine ever collected by a single U.S. regulator in a money-laundering case. The agreement came just eight days after the regulator, Superintendent Benjamin M. Lawsky of the state Department of Financial Services, stunned the banking world, and fellow U.S. regulators, by accusing the fifth-biggest U.K. bank by assets of illegally scheming over a decade to hide more than 60,000 financial transactions totaling $250 billion for Iranian clients. The allegations and the settlement, which were first reported by The Wall Street Journal, sparked criticism of Mr. Lawsky from senior U.K. officials, including central banker Mervyn King.

 

The settlement led the New York regulator to call off a hearing scheduled for Wednesday morning at its offices in Lower Manhattan. The bank's chief executive had flown to New York this weekend to oversee settlement talks, according to people familiar with the bank.

 

The bank, which earlier had contested much of the allegations, acknowledged the fine covers all the transactions that the New York regulator alleged were illegal. The bank hasn't admitted wrongdoing.

 

The settlement took the form of a term sheet signed by Mr. Sands that spelled out the key points in the agreement, including the monetary penalty, said people familiar with the matter. Because the deal was struck so quickly, the final settlement agreement is yet to be drafted in its full legal format, they said.

 

The penalty is the latest in a series of enforcement actions by U.S. authorities against foreign banks over allegations they failed to uphold U.S. money-laundering laws. ING Bank NV of the Netherlands this year agreed to pay $619 million to settle charges in a case brought by U.S. Justice Department and the Manhattan district attorney's office, with the resulting funds split by those two entities.

 

Other banks that have settled similar allegations that they broke U.S. sanctions laws in recent years include ABN Amro Bank, now part of Royal Bank of Scotland Group http://online.wsj.com/public/quotes/main.h...od=inlineTicker PLC, Credit Suisse Group AG http://online.wsj.com/public/quotes/main.h...od=inlineTicker and Barclays PLC.http://online.wsj.com/public/quotes/main.h...od=inlineTicker ING, Royal Bank of Scotland, Credit Suisse and Barclays acknowledged violating laws including the Trading With the Enemy Act. http://online.wsj.com/public/quotes/main.h...od=inlineTickerHSBC Holdings PLC is being probed by U.S. authorities and has told investors that it has reserved $700 million to pay fines.

 

Standard Chartered's actions regarding Iran are still under criminal investigation by the Federal Bureau of Investigation and the Justice Department, according to federal officials.

 

The bank, following its internal review, had already uncovered $14 million of improper money transfers for Iranian clients, a bank spokesperson said.

 

A Standard Chartered spokesman said a formal agreement "is expected to be concluded shortly." He added that the bank "continues to engage constructively with the other relevant U.S. authorities."

 

 

 

Standard Chartered's actions regarding Iran are still under criminal investigation by the Federal Bureau of Investigation and the Justice Department, according to federal officials.The bank, following its internal review, had already uncovered $14 million of improper money transfers for Iranian clients, a bank spokesperson said.A Standard Chartered spokesman said a formal agreement "is expected to be concluded shortly." He added that the bank "continues to engage constructively with the other relevant U.S. authorities." The settlement discussions between Standard Chartered and Mr. Lawsky's office began last Tuesday. Mr. Lawsky had leveled his allegations after the London stock market closed that Monday afternoon, U.K. time.

 

The stock has dropped 7% on the London Stock Exchange since the allegations came to light Aug. 6, wiping out $2.4 billion in market value.

 

While the bank's attorneys and executives worked to address the allegations, they also sounded out other U.S. regulators, in the hopes that all would come together to negotiate with the bank as a group.

 

Both Mr. Lawsky's office and the bank's attorneys worked on two tracks. They prepared documents and presentations to hash out the facts of Mr. Lawsky's case at a hearing he set for Wednesday, while bracing to wrangle over the price tag and terms of a settlement agreement.

 

The talks stretched late into Monday and were finalized Tuesday, said people familiar with the matter, with Mr. Sands signing the document just hours before Mr. Lawsky's office put out a statement at about 2 p.m.

 

Four other U.S. regulators that have been probing the bank's actions weren't part of the settlement. The U.S. Treasury Department, the Federal Reserve, the U.S. Department of Justice and the Manhattan district attorney's office have been negotiating with Standard Chartered since 2011 to reach a settlement over its Iran-related transactions.

 

Standard Chartered wanted to settle with U.S. authorities as a group to assuage investors' concerns about exposure to future penalties, but the other regulators didn't move quickly enough, said a person close to the bank.

 

A Treasury Department representative said: "Our investigation continues. Treasury will continue working with our regulatory and law enforcement partners to hold Standard Chartered accountable for any sanctionable activity that occurred."

 

A Justice Department spokesman said the agency "continues to work closely with our regulatory and other partners to determine what actions might be appropriate in this matter.''

 

"The Federal Reserve continues to work with the other agencies on a comprehensive resolution," said a Fed spokeswoman.

 

"Banks that violate international sanctions aren't just breaking the law, they are enabling the financing of terrorist regimes and undermining our collective safety and security," said Erin Duggan, a spokeswoman for Manhattan District Attorney Cyrus Vance Jr.

 

As part of the settlement, Standard Chartered agreed to install a monitor chosen by Mr. Lawsky's office to oversee its international transactions. The bank also agreed to appoint its own auditors in its New York office to oversee compliance with U.S. money-laundering laws.

 

Analysts say the settlement is a good outcome for Standard Chartered. They say the penalty is manageable for a bank that generated nearly $4 billion of profit in the first half of 2012. And the resolution of Mr. Lawsky's probe, as well as his threat to revoke the bank's New York license, is likely to relieve investors, said Alastair Ryan, a London-based banking analyst with UBS.

 

"Putting this issue behind them will be welcomed by shareholders," Mr. Ryan said. "Regulators, however aggressive, hold the whip hand now and removing tail risk for this [$340 million] figure

[Mustank]

that time citibank pte banking japan also the same mar....then the ceo got to send a memo down to everyone tell everyone dont be so hiong

[Mazdaowner]

Next year Stan chart run increase price liow. [laugh]