Deutsche Bank AG is among four European banks being investigated by US authorities for alleged violations involving oil trading and Iran, according to an attorney with knowledge of the matter.
Regulators including the US Treasury’s Office of Foreign Assets Control, the Federal Reserve, the Justice Department and the Manhattan district attorney’s office are all involved in the probe of Deutsche Bank and three other European banks, said the attorney, who asked not to be identified because the investigations are confidential.
“Deutsche Bank had decided by 2007 to reject any new business with Iran, Syria, Sudan and North Korea and to end existing relationships to the extent it was legally possible,” Deutsche Bank spokeswoman Friederika Borgmann said, declining to comment on the US investigation.
The regulators were in advanced stages of an investigation into banking violations at Standard Chartered Plc when the superintendent of New York’s banks, Benjamin Lawsky, moved first in that matter with an August 6 order accusing the London-based lender of multiple violations of state banking laws.
Once the federal authorities resolve their probe of Standard Chartered, they will proceed against the four European banks they have been investigating, including Frankfurt-based Deutsche Bank, according to the attorney.
Erin Duggan, a spokeswoman in the Manhattan district attorney’s office, didn’t immediately return an e-mail sent outside of regular business hours seeking comment on the probe. Dean Boyd of the Justice Department, John Sullivan, a Treasury spokesman, and Barbara Hagenbaugh, a Federal Reserve spokeswoman, declined to comment.
U-Turn Transactions: Lawsky’s order accused Standard Chartered of helping Iran launder about $250 billion (Dh918 billion) in violation of federal laws. He accused the bank of a decade of deception, including keeping false records, in handling lucrative wire transfers for Iranian clients. The bank sent them through its New York unit in so-called U-turn transactions with client names omitted to hide their provenance, Lawsky said.
Lawsky reached a settlement with Standard Chartered on August 14, in which the bank agreed to pay $340 million to settle the claims. The New York regulator said that day in a statement that “the parties have agreed that the conduct at issue involved transactions of at least $250 billion.” The $340 million fine will go to Lawsky’s agency, New York’s Department of Financial Services, or DFS, and the state.
As part of the settlement, New York said the bank agreed to install an independent on-site monitor for at least two years who will report directly to regulators. Examiners from the DFS will also be placed at the bank.
Lawsky’s agency, according to the Aug. 6 order, is investigating wire transfers executed by Standard Chartered’s New York branch on behalf of other US-sanctioned countries, including Myanmar and Sudan and Libya, before the ouster of Muammar Qaddafi.
Engage Constructively: The sum may be the largest ever paid to an individual regulator as part of a money-laundering accord. In June, ING Bank NV agreed to pay $619 million to settle similar allegations. That was split into equal payments of $309.5 million to the federal government and the Manhattan District Attorney. A person familiar with the New York probe of Standard Chartered said that Lawsky had sought as much as $700 million to settle his investigation.
Standard Chartered said in an Aug. 14 statement that it “continues to engage constructively with the other relevant US authorities.” From 2004 through 2007, Standard Chartered was subject to formal action over other regulatory compliance failures related to the Bank Secrecy Act, anti-money laundering policies and procedures and regulations of the US Office of Foreign Assets Control, the main overseer of Iran transactions.
In a 2004 agreement with regulators, the bank promised to monitor and improve money-laundering controls. The restrictions of the agreement were lifted in 2007 because the bank provided a “watered-down” report of compliance, according to Lawsky’s order. Bank statements “misled” the department into lifting the restrictions of the 2004 agreement, the order stated.
Courtesy Gulf News