Aug. 15 (Bloomberg) -- Standard Chartered Plc, having settled a New York money laundering probe for $340 million the day before it was to defend its right to operate in the state, still faces federal inquiries over claims it helped sanctioned nations including Iran illegally funnel money through the U.S.
Regulators including the U.S. Treasury, Federal Reserve, Justice Department and Manhattan District Attorney declined attempts at a global settlement, said two people familiar with the matter. A coordinated effort was already in progress before New York’s unilateral deal, announced yesterday by financial regulator Benjamin Lawsky, one of the people said.
The agreement doesn’t take into account all of the bank’s alleged violations, including those involving nations such as Sudan, said one of the people, who added that September is the earliest a universal deal may be reached. Shares of the bank rose as much as 5.1 percent in London today as the New York settlement removes one immediate risk to the U.K.-based bank.
“From the bank’s perspective, they needed to get this behind them,” Ann Graham, director of the Business Law Institute at Hamline University School of Law in St. Paul, Minnesota, said of the New York agreement. “Had this action gone forward, the potential was that they could lose their license to operate in New York, and that would have been devastating to their operations.”
One analyst estimated that the bank’s loss of its New York license could have resulted in a 40 percent drop in earnings.
Aug. 6 Order
On Aug. 6, Lawsky issued an order accusing Standard Chartered of helping Iran launder about $250 billion in violation of federal laws. He accused the bank of a decade of deception, including keeping false records, in handling lucrative wire transfers for Iranian clients. The bank sent them through its New York unit in so-called U-Turn transactions with client names omitted to hide their provenance, Lawsky said.
The New York regulator said yesterday in a statement that “the parties have agreed that the conduct at issue involved transactions of at least $250 billion.” The $340 million fine will go to Lawsky’s agency, New York’s Department of Financial Services, or DFS, and the state.
As part of the settlement, New York said the bank agreed to install an independent on-site monitor for at least two years who will report directly to regulators. Examiners from the DFS will also be placed at the bank.
The accord may be the largest ever paid to an individual regulator as part of a money laundering accord. In June, ING Bank NV agreed to pay $619 million to settle similar allegations. That sum was split evenly between a $309.5 million payment to the federal government and an equal sum to the Manhattan District Attorney. A person familiar with the New York probe of Standard Chartered said that Lawsky had sought as much as $700 million to settle his investigation.