Monday, August 6, 2012

Another Front Opens Against Bank Skullduggers; Consultant Implicated (8/6/12; rev'd 8/7/12)

The New York Times reports that Standard Chartered Bank is under investigations of its dealings iwth Iran and perhaps other terrorist affiliated countries.  Jessica Silver Greenberg, British Bank Accused of Hiding Transactions With Iranians (NYT 8/6/12), here.

The opening paragraphs:
Thwarting controls against money laundering, Standard Chartered Bank enabled Iranian banks and corporations to hide roughly 60,000 transactions worth at least $250 billion within the bank, New York State’s banking regulator charged Monday. 
The New York State Department of Financial Services accused the British bank, which it called a “rogue institution,” of hiding the transactions to gain hundreds of millions of dollars in fees from January 2001 through 2010.
Under United States law, transactions with Iranian banks are strictly monitored and subject to sanctions because of government concerns about the use of American banks to finance Iran’s nuclear programs and terrorist organizations.
The highest levels of management knew that Standard Chartered was deliberately falsifying records to allow billions of dollars in transactions to flood through the bank, according to the regulatory filing. 
The bank “left the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes,” the agency said in an order sent to the bank Monday. At the most extreme, the agency’s enforcement actions against the bank could include the revocation of its license to operate in New York. 
Beyond the dealings with Iran, the department said it discovered evidence that Standard Chartered operated “similar schemes” to do business with other countries under United States sanctions, including Burma, Libya and Sudan.
See Also

Jonathan Stempel and Carrick Mollenkamp, Standard Chartered left U.S. vulnerable to terrorists (Reuters 8/6/12), here.

I don't recall that Standard Chartered Bank has surfaced as a promoter of secret U.S. depositor accounts.  Still, if you have a bank culture willing to skirt the rules (at least as alleged), I just wonder if they avoided playing in other illegal games.

Addendum 8/7/12:  Deloitte LLP "Deloitte LLP consultants hid details from regulators about Standard Chartered Bank's transactions with Iranian clients."  Dana Aubin, Deloitte's role cited in Standard Chartered Iran deceit (Reuters 8/7/12), here.

3 comments:

  1. I have been privately commenting to several people today that Standard has a real problem given they are dealing with the NYSBD and not the Feds. The Feds like to talk a tough game and give a lot of fines and go after "individuals" but they aren't into actually shutting down US institutions or the US presence of foreign institutions. At this point if you look at the NY State order there is almost very little wiggle room from the standpoint of the NYSBD not at this point to shut Standard Chartered down in NYS. Unlike the Feds NYS is going to have justify any lenient treatment of Standard to the large constituency of small local start chartered banks who would be shut down in similar circumstances and the various State Senators and Reps in Albany who represent them.

    ReplyDelete
  2. I have been privately commenting to several people today that Standard has a real problem given they are dealing with the NYSBD and not the Feds. The Feds like to talk a tough game and give a lot of fines and go after "individuals" but they aren't into actually shutting down US institutions or the US presence of foreign institutions. At this point if you look at the NY State order there is almost very little wiggle room from the standpoint of the NYSBD not at this point to shut Standard Chartered down in NYS. Unlike the Feds NYS is going to have justify any lenient treatment of Standard to the large constituency of small local start chartered banks who would be shut down in similar circumstances and the various State Senators and Reps in Albany who represent them.

    ReplyDelete
  3. Could someone please explain why this affair has been brought on by NYSBD and not by some Fed agency? From the description, it appears to be quite a little more than a bank licensing issue.

    It's not my area of expertise, but it certainly smells like one or two felonies were allegedly committed, not to mention a possible violation of the AICPA ethical rules...

    ReplyDelete

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