New York regulators accused a Standard Chartered Bank banking unit of plotting with Iran to hide more than $250 billion in transactions for nearly a decade.
"For almost 10 years, [Standard Chartered Bank] schemed with the government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion, and reaping SCB hundreds of millions of dollars in fees," the New York Financial Services Department order read. "SCB's actions left the U.S. 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."
The order issued by Financial Services Superintendent Benjamin Lawsky said Standard Chartered could lose its license to operate in New York and its U.S. dollar-clearing operations could be suspended.
The agency ordered the British bank's U.S.-based subsidiary to "explain these apparent violations of law" at a hearing Aug. 15. Lawsky also directed that an independent monitor chosen by Financial Services oversee the banking unit's operations.
The order said the department first focused on the bank's "apparent systematic misconduct on behalf of Iranian clients" but later discovered evidence of "what are apparently similar SCB schemes to conduct business with other U.S. sanctioned countries, such as Libya, Myanmar and Sudan."
In its "zeal" to make money, SCB falsified business records, didn't maintain accurate books and records of all transactions, obstructed government administration, evaded federal sanctions and "numerous other violations of law that ... have an impact on the safety and soundness of SCB's New York branch and the department's confidence in SCB's character, credibility and fitness as a financial institution licensed to conduct business under the laws" of New York, the order said.
The department alleged that from early in 2001 through 2010, SCB concealed money received from Iranian clients from New York and U.S. regulators. During the period, the U.S. Office of Foreign Assets Control required U.S. financial institutions to filter all dollar clearing transactions so those involving sanctioned entities could be identified and frozen pending an investigation.
"Motivated by greed, SCB acted for at least 10 years without any regard for the legal, reputational and national security consequences of its flagrantly deceptive actions," the order said. "Led by its most senior management, SCB designed and implemented an elaborate scheme by which to use its New York branch as a front for prohibited dealings with Iran."