Standard Chartered Bank ("SCB") has agreed to a USD 340 million settlement with the New York State Department of Financial Services ("DFS"). The DFS had accused SCB of scheming with the Iranian government for nearly a decade in efforts to hide 60,000 transactions, worth USD 250 billion, from regulators.
According to SCB's press statement, SCB voluntarily approached all relevant US agencies, including the DFS, and informed them that they had initiated a review of historical US dollar transactions and SCB's compliance with US sanctions. This review focused primarily on transactions relating to Iran in the period 2001-2007 and, in particular, SCB's compliance with the U-turn framework established by the US authorities to enable ongoing US dollar trade with Iran by other countries. The possibility to use U-turn transactions was revoked in 2008 by the U.S authorities.
SCB stated that well over 99.9% of the transactions relating to Iran complied with the U-turn regulations. According to SCB the total value of transactions that did not follow the U-turn framework was less than USD 14 million. The DFS did not follow SCB's reasoning.
Four other U.S. regulators that have been probing into SCB's actions are not part of the settlement. The U.S. Treasury Department, the Federal Reserve, the U.S. Department of Justice, and the Manhattan District Attorney's office have been negotiating with SCB since 2011 about a settlement over its Iran-related transactions. SCB had hoped to reach a deal with all regulators involved, but DFS's solo announcement made this impossible. SCB still faces possible steps by the other regulators.
As part of the settlement, SCB will install a monitor for at least two years to vet the bank’s money-laundering controls and recruit permanent officials to audit the bank’s internal procedures.