Standard Chartered fined $1.1bn for money-laundering and sanctions breaches

Settlements with US and UK authorities force bank to take hit in first-quarter results

Standard Chartered has been ordered to pay $1.1bn (£842m) by US and UK authorities to settle allegations of poor money-laundering controls and breaching sanctions against countries including Iran.

The British bank has agreed to pay $947m to American agencies, including the US Department of Justice, over allegations that it violated sanctions against a string of countries including Iran.

Separately, it was fined £102m by the Financial Conduct Authority for anti-money-laundering breaches that included “shortcomings” in its counter-terrorism finance controls in the Middle East. It is the second-largest fine ever imposed by the UK regulator for anti-money-laundering failures.

The US treasury department said the latest fines settled “apparent violations” of sanctions imposed against Burma, Zimbabwe, Cuba, Sudan, Syria, and Iran.

It said Standard Chartered processed transactions worth $438m between 2009 and 2014, the majority of which involved Iran-linked accounts from its Dubai branch routing payments through, or to, its New York office or other US-based banks.

The fines were widely expected after Standard Chartered said in February it had set aside $900m (£691m) to cover US and UK penalties. However, the final settlements will force the bank to take a further $190m hit in its first-quarter results, which it will report on 30 April.

Standard Chartered said on Tuesday it “accepts full responsibility for the violations and control deficiencies”, adding that the “vast majority” of the alleged incidents took place before 2012. None of the breaches occurred after 2014, it added.

But the bank, which is headquartered in London but focused on Asia, the Middle East and Africa, placed partial blame on two former junior employees, who were “aware of certain customers’ Iranian connections and conspired with them to break the law, deceive the group and violate its policies”. Standard Chartered said: “Such behaviour is wholly unacceptable to the group.”

Bill Winters, the chief executive, said: “We are pleased to have resolved these matters and to put these historical issues behind us. The circumstances that led to today’s resolutions are completely unacceptable and not representative of the Standard Chartered I am proud to lead today.”

The settlements announced on Tuesday are, together, the largest imposed on Standard Chartered since 2012, when it paid $667m to put to rest US allegations of sanctions breaches between 2001 and 2007.

US assistant attorney general, Brian Benczkowski, said: “Today’s resolution sends a clear message to financial institutions and their employees: if you circumvent US sanctions against rogue states like Iran – or assist those who do – you will pay a steep price.”

The Financial Conduct Authority had raised concerns about anti-money-laundering controls at Standard Chartered’s UK-based correspondent bank and its United Arab Emirates branches. It highlighted “serious shortcomings” in customer due diligence and said the bank also failed to ensure its UAE branches applied proper counter-terrorist financing controls.

The FCA gave examples where a customer was able to open an account by handing over around 3m UAE dirham (£500,000) in cash in a suitcase, with little evidence that the source of the cash was investigated. It also said Standard Chartered failed to collect sufficient information on a customer exporting goods that could have a “military application” to regions involved in armed conflict.

The prospect of major fines have hung over Standard Chartered since 2012, when it entered into a deferred prosecution agreement (DPA) with the US Department of Justice and the New York county district attorney’s office over Iranian sanctions breaches beyond 2007.

Other UK banks to have fallen foul of US authorities include RBS, which paid out more than $10bn in relation to the alleged mis-selling of mortgage-backed securities. In 2012, HSBC paid a fine of $1.9bn to settle US money-laundering allegations.

DPAs allow firms to settle charges with state authorities without facing criminal prosecution. The companies must agree to specified conditions, which can include a fine and their conduct being monitored for a set period.

The DPA was set to expire on Wednesday, but has now been extended until April 2021. Over the next two years Standard Chartered will effectively be on probation, giving US agencies the right to criminally prosecute the bank if it breaks the law.

Standard Chartered said it had “undergone a comprehensive and positive transformation since the conduct and control issues ... occurred”. The shares ended the day up 0.3% at 647p.

Contributor

Kalyeena Makortoff Banking correspondent

The GuardianTramp

Related Content

Article image
US regulators force Standard Chartered to retract Iran sanctions comments

Chairman apologises for dismissing breaches of US sanctions to Iran, for which bank was fined £415m, as 'clerical errors'

Jill Treanor

21, Mar, 2013 @11:43 AM

Article image
Standard Chartered 'exits clients' in effort to clean up its business
Chief executive announces bank has been rooting out some of its customers in the wake of regulatory investigations

Jill Treanor

03, Aug, 2016 @11:31 AM

Article image
Standard Chartered faces fresh US fines over money laundering rule breach
In legal warnings attached to its first-half results, bank says there are problems with its system to counter money laundering

Jill Treanor

06, Aug, 2014 @5:08 PM

Article image
Standard Chartered boss arrives in New York over bank allegations
As bank seeks settlement over Iran transactions, CEO Peter Sands awaits whether he must attend hearing with US regulator

Jill Treanor

13, Aug, 2012 @5:07 PM

Article image
Inquiry by US authorities sees Standard Chartered shares slide
Share price fall piles pressure on Peter Sands, the London-listed bank’s boss, who will meet investors in Hong Kong next month

Jill Treanor

30, Oct, 2014 @7:19 PM

Article image
Standard Chartered faces downgrading of credit rating
Claims that Standard Chartered broke US sanctions against Iran could lead to credit rating being downgrading, the agency Fitch warned

Jill Treanor

09, Aug, 2012 @7:26 PM

Article image
Santander UK fined £108m over anti-money laundering failings
Financial Conduct Authority found ‘serious and persistent gaps’ in bank’s controls

Mark Sweney

09, Dec, 2022 @11:04 AM

Article image
Standard Chartered agrees $340m settlement with US regulator over Iran

Chief executive Peter Sands under pressure after bank agrees to pay fine levied by New York department of financial services

Jill Treanor

14, Aug, 2012 @7:19 PM

Article image
Standard Chartered: rogue bank or victim of renegade regulator?
Only one side can win in the fight between the bank and New York's state department of financial services over Iran allegations

Nils Pratley

07, Aug, 2012 @6:20 PM

Article image
Standard Chartered chief says bank does not need to change culture
Peter Sands claims 'factual inaccuracies' in accusations by US regulator that bankers helped Iran avoid financial sanctions

Jill Treanor, City editor

08, Aug, 2012 @6:10 PM