NEW YORK // New York regulators yesterday accused Standard Chartered Bank of hiding $250 billion in transactions with Iranian banks for almost a decade in violation of US sanctions.
Branding the London-based global financial giant a "rogue bank," New York state regulators accused Standard Chartered of systematically disguising foreign exchange deals with Iran that might have allowed terrorists and criminals to gain access to the US banking system.
New York's Department of Financial Services threatened the bank with fines and possible suspension of its licence to operate in the state, the hub of the US financial industry, after detailing the dealings in the latest US move against foreign banks trading with Tehran.
Standard Chartered Bank was ordered to appear before the department on August 15 "to explain these apparent violations of law and to demonstrate why SCB's licence to operate in the State of New York should not be revoked".
"For almost ten years, SCB schemed with the Government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion, and reaping SCB hundreds of millions of dollars in fees."
The transactions mainly involved handling US dollar transfers for major state-owned Iranian banks, including the country's central bank, that fell under strict US government controls aimed at blocking finance for Tehran's alleged nuclear weapons programme.
The regulator said Standard Chartered falsified records of the transactions and obstructed oversight "in its evident zeal to make hundreds of millions of dollars at almost any cost".
The transactions "left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity," it said.
The department said its investigation also had revealed evidence of possible illegal transactions with Libya, Myanmar and Sudan while those countries were under US sanctions.
The accusations came weeks after a US Senate report accused HSBC, also based in London, of concealing more than $16 billion in sensitive transactions with Iran and Mexican drug lords over 2001-2007.
Last week HSBC, one of the world's top five banks by asset size, set a provision of $700 million to cover possible fines related to the transactions and warned the overall cost could be "significantly higher".
And in June ING Bank was fined $619 million for its role in processing $1.6 billion through the US financial system for Cuba, Iran, Myanmar, Sudan and Libya.
The New York regulator cited internal Standard Chartered documents which showed the bank's London office deliberately attempting to build its lucrative Iran business by masking the bank's transactions with Iranian banks.
The explicit aim, according to the documents, were to keep US regulators and the bank's New York operation unaware of the parties involved.
The business involved handling so-called U-turn transactions, in which funds are sent into and then out of the United States, with either or both the sources and beneficiaries of the trades being the Iranian banks.
Such deals were strictly limited, and more recently completely banned, under US sanctions against Tehran.
The documents, the regulator said, showed Standard Charted officials in London had even created "formal operating manuals" for masking the transactions from US banking monitors.
"Senior SCB management knowingly embraced the bank's fraudulent U-Turn procedures," the department said.