NEW YORK • Standard Chartered plc (StanChart) has already paid a painful penalty for secretly moving billions of dollars through the US on behalf of Iranian clients in violation of sanctions.
But a sweeping investigation has found evidence suggesting that the bank’s Iranian business was more extensive than it admitted, according to five people familiar with the matter.
Now, US authorities are weighing a criminal penalty against StanChart and individual employees, the people said, who requested anonymity to speak about the probe.
A coalition of enforcement and regulatory agencies, including the Justice Department, New York’s Department of Financial Services and the Manhattan District Attorney, have finished their investigation and may announce the resolution by the end of the year, the people said.
Authorities may impose an even bigger fine than the US$667 million (RM2.74 billion) the bank paid in 2012 to penalise it for what they view as concealment, though specific numbers had not yet been discussed in negotiations as of early August, according to the people, who declined to comment on private talks.
In securities filings, the bank has said it could face a range of civil and criminal penalties stemming from the case, “including substantial monetary penalties”. StanChart hasn’t set aside specific reserves for this matter.
“We continue to fully cooperate with the investigation regarding our historical sanctions compliance and are engaged in ongoing discussions with the US authorities,” Julie Gibson, a spokeswoman for StanChart, said in a prepared statement. “While we do not comment on the substance of those discussions, we look forward to the resolution of this matter.”
StanChart fell as much as 2.2% and was trading 1.8% lower at 11:41am yesterday in London, the worst performer among the 40 members in the Bloomberg Europe 500 Banks and Financial Services Index.
In its annual report, the bank said the US probe is “examining the extent to which conduct and control failures permitted clients with Iranian interests to conduct transactions through StanChart Bank”.
In settling the original case, StanChart admitted that it hid or disguised the identity of Iranian clients — including the central bank of Iran — in billions of dollars of transactions through the US from 2001 to 2007. As part of the deferred-prosecution agreement, the bank agreed to have an outside monitor scrutinise its business practices and the US agreed to eventually dismiss charges after the bank complied with a deal.
Those terms were set to expire in 2014. But authorities extended the deal — and opened another investigation — after suspicions arose that StanChart continued to conduct Iranian business for clients after 2007. The business allegedly involved facilitating payments for firms based in the United Arab Emirates that were trading with Iranian counterparts, according to people familiar with the probe.
That year, it paid another US$300 million to the New York state banking regulator after the monitor uncovered a flaw in StanChart’s system for tracking suspicious transactions, which the bank was required to do under the original agreement.
The agreement has since been extended twice more, including as recently as last month, and will now run until the end of 2018. Authorities said the bank’s sanctions compliance programme “has not yet reached the standard required” by the deal. In court filings in Washington, prosecutors have said the government “obtained, and continues to obtain, new information related to possible historical violations of US sanctions laws and regulations” after 2007.