RegulationAug 20 2014

StanChart pays $300m for enforcement failures

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Standard Chartered has agreed to pay $300m and stop processing transactions for certain clients to settle with New York’s banking regulator over its failure to improve procedures for identifying suspicious transactions following a 2012 settlement.

As part of the settlement with New York’s Department of Financial Services, Standard Chartered has agreed to suspend clearing of transactions for high-risk Hong Kong business clients and exit high-risk client relationships at its branches in the United Arab Emirates, reports Kara Scannell.

The UK bank will also not be allowed to accept new customers for dollar-clearing without prior approval by DFS.

The settlement stems from Standard Chartered’s failure to implement controls to root out suspicious transactions following its 2012 pact with New York and US authorities for violating US laws prohibiting business with sanctioned countries, such as Iran.

In 2012, Standard Chartered paid $667m and entered into a deferred prosecution agreement with the Department of Justice. Of that penalty, $340m went to DFS.

Standard Chartered agreed to implement a monitor as part of that resolution.

The monitor uncovered the bank’s weaknesses in flagging certain suspicious transactions from UAE and Hong Kong and brought them to the attention of DFS. The monitor will continue for another two years as part of the current deal.

The bank’s suspension will be in effect until the monitor is satisfied that the bank has improved it systems.