Standard Chartered bank accused of secretly aiding terror

By Craig Brown
Published on 07/08/2012 00:00

Standard Chartered, one of the biggest banks in Britain, has been accused of exposing the US to terrorists, drug kingpins and weapons dealers by hiding £160 billion of transactions with the Iranian government.

The institution, one of the five largest banks in the UK by market value, kept about 60,000 transactions secret from US regulators over nearly ten years, the New York State Department of Financial Services has claimed, labelling Standard Chartered a “rogue institution”.

The bank, which employs nearly 90,000 people worldwide, has now been called to appear before regulators to explain the apparent violations and defend its licence to trade on the New York Stock Exchange.

The US banking watchdog has also threatened to revoke the licence of the US arm of Standard Chartered, which is headquartered in London but makes most of its money in Asia.

The regulator said its nine-month investigation, which included sifting through more than 30,000 pages of documents, showed that the bank reaped “hundreds of millions of dollars in fees”.

In a statement it said: “SCB’s actions left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law-enforcement investigators of crucial information used to track all manner of criminal activity.”

Setting out its case in a 27-page complaint, the regulator said Standard Chartered showed “obvious contempt for US banking regulations” and pointed to an e-mail reply from a bank executive director to a New York branch officer, who had voiced concerns about the inherent risks in dealing with Iran.

The director is quoted as replying: “Who are you [Americans] to tell us, the rest of the world, that we’re not going to deal with Iranians?”

The regulator claims that between January 2001 through to 2010, Standard Chartered conspired with Iranian clients to route payments through New York after first stripping information from wire transfer messages used to identify sanctioned countries.

The bank, it is alleged, moved the transactions through its New York offices on behalf of Iranian financial institutions that were subject to US economic sanctions, and then covered up the dealings.

The investigation also said that it discovered evidence that indicated similar schemes had been set up to conduct business with other countries under sanctions – Libya, Myanmar and Sudan. “Investigation of these 
additional matters is ongoing,” it added.

Reacting to the report, Standard Chartered said: “The group is conducting a review of its historical US sanctions compliance and is discussing that review with US enforcement agencies and regulators.

“The group cannot predict when this review and these discussions will be completed or what the outcome will be.”

The findings come after fellow British bank HSBC was 
accused of allowing drug cartels and rogue states to launder billions of pounds via its US arm.