Standard Chartered Bank, which was formed through the merger in 1969
of former British colonial banks - - The Chartered Bank of India, Australia and China,
and Standard Bank of British South Africa - - and came through the
financial crisis unscathed, has been termed a "rogue institution'
that "schemed" with Iran's government to hide more than $250bn in illegal
transactions for nearly a decade. An e-mail reveals that a group director
said: "You fucking Americans. Who are you to tell us, the rest of the world,
that we're not going to deal with Iranians." The alleged scheme was
"apparently aided" by Deloitte & Touche, a Big 4 accounting firm.
The allegations were made
27-page order filed Monday [pdf] by Benjamin M. Lawsky, superintendent of
the New York State Department of Financial Services.
The allegations are based on a 9-month investigation that included the review of
more than 30,000 pages of internal memos, emails and other records, according to
Just weeks after HSBC (Hong Kong and Shanghai Bank), another former British
colonial bank, was accused of aiding Mexican drug cartels and Russian gun
smugglers by a US Senate committee, Standard Chartered is revealed to be
the subject of a criminal investigation by the Federal Bureau of
Investigation and Justice Department.
Standard Chartered said in a statement that it was surprised by the New York
regulator's order and that it "strongly rejects the position or the portrayal of
facts as set out in the order." The bank said it plans to contest the agency's
position and that it is reviewing its compliance and communicating with numerous
regulatory and law-enforcement agencies about its discoveries.
The New York regulator alleges that Standard Chartered
evaded money-laundering reporting requirements by substituting false information
on legally required money-transfer forms. Employees were provided with written manuals
from senior management instructing them on how to fool money-laundering
detection systems and regulators, the agency claims.
The regulator says the alleged scheme was "apparently aided" by Deloitte & Touche
LLP, which the bank hired in 2004 to review its compliance procedures. The
consulting firm was requested by Standard Chartered to delete from a 2005 report
"any reference" to certain types of payments that might tip off regulators.
An email in the regulator's possession reveals that a Deloitte
partner replied: "We agreed" to the request. The partner added that the firm
drafted a "watered-down version." A Deloitte spokesman said Monday that the firm
did its job "properly and had no knowledge of any alleged misconduct by" bank
employees according to The Wall Street Journal.
The Journal says
that Standard Chartered, the UK's fifth-biggest bank with $624bn in
assets, has sprawling operations around the world, including more than 1,700
branches in 70 countries. Much of its profit comes from Asia, the Middle East
and Africa. The New York unit clears about $190bn in US dollar-based
transactions a day, making it an important cog of the UK bank.
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