Standard Chartered Bank yesterday rejected allegations from US regulators that it hid US$250 billion in transactions with Iranian banks for almost a decade in violation of US sanctions.
In the latest US move against foreign banks dealing with Iran, New York state regulators branded the lender a “rogue bank” and threatened it with fines and the suspension of its licence.
The Department of Financial Services (DFS) said the London-based giant systematically disguised foreign exchange deals with Iran that potentially opened the US banking system to terrorists and criminals.
However, Standard Chartered said it “strongly rejects ... the portrayal of facts as set out” by the DFS.
“The group does not believe the order issued by the DFS presents a full and accurate picture of the facts,” group secretary Annemarie Durbin said in a statement to the Hong Kong stock exchange.
Standard Chartered was ordered to appear on Aug. 15 to explain the “apparent violations of law” and demonstrate why its licence to operate in New York should not be revoked.
“For almost 10 years, SCB schemed with the government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least US$250 billion,” the regulator said.
Standard Chartered falsified transaction reports and obstructed oversight “in its evident zeal to make hundreds of millions of dollars at almost any cost,” it added.
The transactions mainly involved US dollar transfers for state-owned Iranian banks, including the central bank, that fell under US controls aimed at undermining Tehran’s alleged nuclear weapons program.
The activity “left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes,” it said.
There was also evidence of possible illegal transactions with Libya, Myanmar and Sudan while they were under US sanctions.
The bank, which focuses on Asia, the Middle East and Africa, said it was surprised at the claims as it had informed US agencies in 2010 that it had voluntarily launched an internal compliance review.
It said the review “did not identify a single payment on behalf of any party that was designated at the time by the US government as a terrorist entity or organization.”
The bank also said it had stopped all new business with Iranian customers more than five years ago.
“The group takes its responsibilities very seriously and seeks to comply at all times with the relevant laws and regulations,” Durbin said. “We intend to discuss these matters with the DFS and to contest their position.”
The bank could face steep fines if found guilty.
Last month, a US Senate report accused London-based HSBC of concealing more than US$16 billion in sensitive transactions with Iran and Mexican drug lords between 2001 and 2007.
In June ING Bank was fined US$619 million for its role in processing US$1.6 billion through the US financial system for Cuba, Iran, Myanmar, Sudan and Libya.