Standard Chartered pay PENALTY

Civil Penalty: StanChart pays $340 mn

AGENCIES

Posted: Wednesday, Aug 15, 2012 at 1211 hrs ISTNew York: Global banking giant Standard Chartered has agreed to pay USD 340 million to New York's top banking regulator, settling allegations that it hid thousands of transactions worth billions of dollars with the Iranian government.

Under the settlement reached with the Department of Financial Services (DFS), Standard Chartered will pay a "civil penalty" of USD 340 million and would have a monitoring system for a term of at least two years.

The monitors would report directly to DFS and evaluate the money-laundering risk controls in the New York branch and implementation of appropriate corrective measures.

The settlement came after StanChart was accused by the New York regulator of hiding about 60,000 secret transactions with the Iranian government, involving a whopping USD 250 billion, and exposing the US financial system to terrorists,

weapon dealers and drug kingpins.

New York Superintendent of Financial Services Benjamin Lawsky said DFS examiners shall be placed on site at the bank and StanChart would permanently install personnel within its New York branch to oversee and audit any offshore money- laundering due diligence and monitoring undertaken by it.

"The parties have agreed that the conduct at issue involved transactions of at least USD 250 billion," Lawsky said, adding that DFS would continue to work with its federal and state partners on matter.

In the wake of the allegations over Iran transactions, Standard Chartered's Chief Executive Peter Sands had flown to New York to take personal control of the bank's attempts to reach a settlement with the US regulators over allegations it

hid transactions involving Iran.

Last week, the New York banking regulator had in its order said that the bank must demonstrate why its state banking licence should not be revoked over the transactions.

The agreement now enables the bank to avoid having its licence to operate in New York revoked.

Lawsky had termed the bank a "rogue institution" for breaking US sanctions.

StanChart had "strongly" rejected the allegations made by DFS. It had said it was conducting a review of its historical compliance and was discussing that review with US agencies, including the state financial services department, Department

of Justice, the Office of Foreign Assets Control and the Federal Reserve Group of New York.

It said the New York order does not present a "full and accurate picture of the facts".

Since the allegations became public just over a week ago the firm's shares have lost around 15 per cent of their value.