The British bank Standard Chartered has agreed to pay a $340m (£220m) fine to a US regulator which had accused it of to hide billions of pounds’ worth of transactions from the US authorities, leaving the financial system susceptible to “terrorists” and “drug kingpins”.
The last-minute settlement – just hours before the bank had been due to appear before the New York department of financial services (DFS) – came after the bank’s chief executive, Peter Sands, to take direct control of the situation and despite his insistence that the allegations contained inaccuracies. The fine is the latest embarrassment for a UK bank, following the penalties slapped and .
It is particularly damaging for Standard Chartered – which is based in London but best known for its banking services in Asia and Africa – as its management, led by Sands, had been boasting just two weeks ago that it was “boring” and had a more conservative culture than its rivals.
A week ago, the DFS said that Standard Chartered had 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”. Led by Benjamin Lawsky, the DFS said that the two parties had agreed that the problems included transactions of at least $250bn. This is the sum that he had included in his order last Monday. The bank conceded that $14m of transactions broke the rules and apologised for them.
A hearing with the DFS originally scheduled for Wednesdayhas now been adjourned, but the bank may face penalties from other US authorities which are still investigating breaches of sanctions on Iran covering the period 2001 to 2007. There were suggestions last night that the $340m was half the fine the DFS had asked for. The bank said that a “formal agreement” with the DFS was expected to be completed shortly and that it was continuing to work with other . The DFS alleged last week that one senior banker remonstrated with a US colleague using the words “you fucking Americans” when warned of the potential breaches of US sanctions. The bank was wrongfooted and took eight hours to respond publicly. US regulators have traditionally worked together when investigating alleged breaches of rules and Lawsky indicated that the DFS would work with the other bodies involved, including the US Treasury, the Federal Reserve, the New York Justice Department and the District Attorney.
New York governor Andrew Cuomo said he had created the DFS last year because “we believed that New York needed a tough and fair regulator for the banking and insurance industries to protect consumers and investors”.
Courtesy: The Guardian
