N.Y. settles probe of Standard Chartered for $340 million

A New York regulator settled a money laundering probe of Standard Chartered Plc for $340 million a day before the U.K.-based bank was to appear at a hearing to defend its right to continue operating in the state.

As part of the agreement, the bank agreed to install an on- site monitor for at least two years who will report directly to state officials. New York regulators will also place examiners at the bank. As a result of the accord, announced today by the state in an e-mailed release, the hearing that had been scheduled for tomorrow has been adjourned.

On Aug. 6, Benjamin Lawsky, head of the New York Department of Financial Services, or DFS, issued an order accusing Standard Chartered of helping Iran launder about $250 billion in violation of federal laws. One analyst estimated loss of the bank’s New York license could result in a 40 percent drop in earnings.

“The New York State Department of Financial Services and Standard Chartered Bank have reached an agreement to settle the matters raised in the DFS Order dated Aug. 6, 2012,” Lawsky said in the statement. “The parties have agreed that the conduct at issue involved transactions of at least $250 billion.”

A person familiar with the case said that Lawsky had sought as much as $700 million to settle the investigation. Julie Gibson, a spokeswoman for Standard Chartered, didn’t immediately return a call seeking comment on the settlement.

Federal Probes

The resolution still leaves the London-based bank the subject of investigations by the U.S. Treasury, the Federal Reserve Bank, the Justice Department and the Manhattan District Attorney. Lawsky said that the agency will “continue to work with our federal and state partners on this matter.”

The DFS was created in 2011 when New York’s Banking Department and Insurance Department were abolished, with their functions and authority transferred to the new regulator, under Lawsky. The agency has the power to issue regulations, investigate and fine financial services companies. It may also probe alleged criminal activity and refer its findings to the state’s attorney general for prosecution.

“We created the Department of Financial Services because we believed that New York needed a tough and fair regulator for the banking and insurance industries to protect consumers and investors,” New York Governor Andrew Cuomo said today in a statement. “This result demonstrates the effectiveness and leadership of the new Department of Financial Services, and I commend the state legislature for creating a modern regulator for today’s financial marketplace.”

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments
comments powered by Disqus