HONG KONG - Agence France Presse
The banking regulator of the US accuses London-based Standard Chartered of working with the Iranian government and hiding from regulators roughly 60,000 secret transactions, involving at least $250 billion for ten years. The lender, which focuses on Asia, the Middle East and Africa, strongly denies claims
The Standard Chartered shares plunged 14.9 percent to HK$160.10 at the close of trade in Hong Kong bourse yesterday and opened 15.7 percent lower in London. EPA photo
Standard Chartered Bank yesterday rejected allegations from U.S. regulators that it hid $250 billion in transactions with Iranian banks for almost a decade in violation of U.S. sanctions.
In the latest U.S. move against foreign banks dealing with Iran, the Department of Financial Services (DFS) threatened the U.K. giant with fines and the suspension of its license.
The DFS said Standard Chartered systematically disguised foreign exchange deals with Iran
that potentially opened the U.S. banking system to “terrorists and criminals.” But Standard Chartered said it “strongly rejects ... the portrayal of facts as set out” by the DFS.
“The group does not believe the order issued by the DFS presents a full and accurate picture of the facts,” group secretary Annemarie Durbin said in a statement to the Hong Kong stock exchange.
Standard Chartered was ordered to appear on Aug. 15 to explain the “apparent violations of law” and demonstrate why its licence to operate in New York should not be revoked.
“For almost 10 years, SCB schemed with the government of Iran
and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion,” the regulator said.
Standard Chartered falsified transaction reports, it added.
The transactions mainly involved U.S. dollar transfers for state-owned Iranian banks, including the central bank, that fell under U.S. controls aimed at undermining Tehran’s alleged nuclear weapons program.
There was also evidence of possible illegal transactions with Libya, Myanmar and Sudan while they were under U.S. sanctions, it said.
The bank said it had informed U.S. agencies in 2010 that it had voluntarily launched an internal compliance review. It said the review “did not identify a single payment on behalf of any party that was designated at the time by the U.S. government as a terrorist entity or organization.”
The bank also said it had stopped all new business with Iranian customers more than five years ago.
“We intend to discuss these matters with the DFS and to contest their position,” Durbin said.
Justin Harper, market strategist for IG Markets in Singapore, said being tagged a “rogue bank” by a U.S. regulator was a severe blow. “They have got a good reputation in the industry which will be tarnished by these accusations, whether they prove accurate or not,” he told AFP. But Kathy Lien, managing director at the New York-based BK Asset Management, said she doubted the bank would be brought down by the scandal.HSBC, ING were fined
“At worst, they will get a slap on the wrist and pay a fine,” she said.
In July, a U.S. Senate report accused London-based HSBC of concealing more than $16 billion in sensitive transactions with Iran
and Mexican drug lords over 2001-2007.
And in June ING Bank was fined $619 million for its role in processing $1.6 billion through the U.S. financial system for Cuba, Iran, Myanmar, Sudan and Libya.
The regulator, citing internal Standard Chartered documents, said the bank’s London office routinely stripped the transactions of any signs that Iranian banks were involved.
“Senior SCB management knowingly embraced the bank’s fraudulent U-turn procedures,” the department said.
The bank’s attitude was captured in a comment from a group executive director, as related to the New York regulator by an officer of Standard Chartered’s New York branch.
Using vulgar language, he purportedly asked: “Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?” In a statement accompanying an interim profit result last week, chief executive Peter Sands lauded the bank’s “culture and values”.
“We are selective and turn things down that we don’t understand, or don’t like the look of,” he said.