The New York State Department of Financial Services (NYSDFS) has launched an investigation into Standard Chartered Bank’s (SCB) dealings with Iranian financial institutions including Central Bank of Iran/Markazi (CBI/Markazi), as well as Bank Saderat and Bank Melli, both of which are also Iranian state-owned institutions.
The department alleges that SCB, a wholly owned subsidiary of Standard Chartered, “schemed with the government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least US$250bn, and reaping SCB hundreds of millions of dollars in fees”.
It contends that SCB’s actions “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.”
The NYSDFS is threatening to revoke SCB’s banking licence and suspend its US dollar clearing operations pending the formal licence revocation hearing.
SCB is accused of:
- 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 SCB.
- Obstructing governmental administration.
- Failing to report misconduct to the NYSDFS in a timely manner.
- Evading Federal sanctions.
- Numerous other violations of law that “have an impact upon the safety and soundness of SCB?s 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.”
Iran may be just the tip of the iceberg. The department’s initial focus is on SCB’s apparent systematic misconduct on behalf of Iranian clients. However, its review has uncovered evidence with respect to what are apparently similar SCB schemes to conduct business with other US sanctioned countries, such as Libya, Myanmar and Sudan. Investigation of these additional matters is ongoing.
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