US steps up pressure on 'rogue' UK bank
Standard Chartered is in the dock charged with allowing its New York branch to act ‘as a front for prohibited dealings with Iran’ and laundering $250bn in the process
USING ITS New York-based operations, a major British bank schemed with the Iranian government for nearly a decade to launder $250 billion, leaving the US financial system vulnerable to terrorists and corrupt regimes, New York’s top banking regulator charged on Monday.
The New York State Department of Financial Services accused Standard Chartered, which the agency called a “rogue institution”, of masking more than 60,000 transactions for Iranian banks and corporations, motivated by the millions of dollars it reaped in fees.
Senior management at the 150-year-old bank used the New York branch “as a front for prohibited dealings with Iran – dealings that indisputably helped sustain a global threat to peace and stability”, according to a regulatory order sent to the bank. The order requires the bank to explain the apparent violations of law in a hearing later this month and justify why its license to operate in New York shouldn’t be revoked.
The bank said on Monday night that it “strongly rejects the position and portrayal of facts” by the agency.
The FBI said that it had an open investigation into money-laundering at Standard Chartered. In the order, regulators paint a vivid picture of a cover-up that included the code name “Project Gazelle”, money flowing to Iran’s central bank, US executives warning of “criminal liability”, and a manual that taught employees how to automate the masking of a rising number of illegal transactions.
The accusations against Standard Chartered come as US officials work to crack down on the flow of money to foreign countries, companies and individuals connected to terrorism, weapons of mass destruction and drug trafficking.
Beyond the dealings with Iran, the banking regulator said it had discovered evidence that Standard Chartered operated “similar schemes” to do business with other countries under US sanctions, including Burma, Libya and Sudan.
Earlier on Monday, a spokesman for Standard Chartered said the bank was reviewing its “historical US sanctions compliance and is discussing that review with US enforcement agencies and regulators”.
But the order accuses senior executives at the bank of suppressing complaints. For example, in 2006, according to the order, the bank’s chief executive for the Americas wrote to his bosses in London that the transactions had “the potential to cause very serious or even catastrophic reputational damage to the group”.
According to the order, the response was hostile, denigrated Americans and asked: “Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.”
The department of financial services, led by Supt Benjamin M Lawsky, said it was “impossible to know” how much of the money might have been used by Iran to finance its nuclear programme or to support terrorist organisations.