StanChart hit by high-risk client ban

Bank to suspend certain high-risk clearing activity and exit certain relationships

Standard Chartered will be barred from processing transactions for some high-risk clients as part of a $300 million (€225 million) settlement with New York’s banking regulator after it failed to improve procedures for identifying suspicious activity.

As part of the agreement with New York's Department of Financial Services (DFS), StanChart will suspend clearing activity for high-risk Hong Kong business clients and exit certain client relationships at its branches in the United Arab Emirates. The UK bank will also not be allowed to accept new customers for dollar-clearing without approval from DFS.

‘Accepts responsibility’

The bank said last night that the deal would affect a limited number of clients: “The group accepts responsibility for and regrets the deficiencies in the anti-money laundering transaction surveillance system at its New York branch. The group has . . . begun extensive remediation efforts and is committed to completing these with utmost urgency.”

However, the news is expected to add to pressure on chief executive Peter Sands who has been criticised for the bank's poor performance and sliding share price over the past two years. One top-10 investor said: "Peter is in the last-chance saloon. If the second-half results are bad, he is gone."


The settlement comes two years after the bank was fined $667 million for violating sanctions rules, of which $340 million went to DFS. It stems from StanChart's failure to implement controls to detect suspicious transactions as required under the 2012 pact agreed with New York and US authorities, which found it had violated laws prohibiting business with countries subject to sanctions, such as Iran.

The suspension of client relationships and the follow-on fine sets a new bar for banks doing business in the state. – (Copyright The Financial Times Limited 2014)