Standard Chartered has agreed a deal with New York Superintendent of Financial Services, Benjamin Lawsky, under which the bank will pay US$340m towards settling allegations that it broke sanctions by trading with Iran.
The eleventh-hour settlement enabled it to avert a hearing scheduled for today at which the bank had been called to demonstrate why its license to transact business in New York should not be revoked.
Standard Chartered confirmed that the two sides had reached an agreement, including the payment of US$340m, and said detailed terms would be concluded soon. “It was a pragmatic decision in the best interest of shareholders and customers,” a spokesman for the bank said.
Lawsky had issued the allegations on 6 August, when he described Standard Chartered as a “rogue institution” that had broken US sanctions on Iran by concealing Iran-linked transactions with a total value of US$250bn from regulators. In addition to the civil penalty, Lawsky said that the bank had agreed to an outside monitor for at least two years to check on controls on money-laundering at its New York branch.
Lawsky’s aggressive stance heightened his public profile just months after the Department of Financial Services, the agency he heads, was created out of the state’s banking and insurance regulators. Shortly after the deal was announced, New York Governor Andrew Cuomo praised the “effectiveness and leadership” of the new agency. “New York needed a tough and fair regulator for the banking and insurance industries to protect consumers and investors,” Cuomo said.
However, Standard Chartered still faces a two-year probe of alleged Iran-linked transactions by the US Treasury, the Federal Reserve, the Justice Department and New York prosecutors. Lawsky also attracted criticism by acting independently ahead of its conclusion. “It’s very unfortunate this wasn’t done as a global state and federal settlement,” said Ed Wilson, a former senior attorney at the US Treasury Department.
Standard Chartered’s settlement is similar to financial penalties imposed on other banks accused of improperly doing business with sanctioned states such as Iran and Cuba. In 2010, Barclays paid US$298m to settle a joint probe with federal and New York authorities. Lloyds and Credit Suisse Group previously agreed to pay settlements, of US$350m and US$536m respectively, and ING was fined US$619m. HSBC is currently under investigation by US law enforcement, according to bank regulatory filings.
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