Standard Chartered Bank accused of scheming with Iran to hide transactions

After all the gross malfeasance by the banks this is the one, according to the Americans is guilty “flagrantly deceptive actions” and could be expelled from Wall Street.

'You Fucking Americans. Who Are You To Tell Us, The Rest Of The World, That We’re Not Going To Deal With Iranians'

British bank named in scathing report by regulators which claims SCB helped Iranian clients skirt US financial sanctions

The Guardian,

6 August, 2012

Bank ran a rogue unit that that schemed with Iran's government to hide more than $250bn (£160bn) in illegal transactions for nearly a decade, according to a scathing report by New York regulators.

According to the report filed by the New York state department of financial services (NYSDFS), when challenged a US colleague, a Standard Chartered executive caustically replied: "You fucking Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians."

About 60,000 transactions were involved and the bank was "apparently aided" by its consultant Deloitte & Touche in hiding details from regulators.

The bank could lose its license to trade in New York, a potentially devastating blow, and has been summoned to a meeting with the regulator on 15 August to answer the allegations.

Shares in the London-listed bank dropped sharply in the final seconds of trading when the report was published just as London's stock market was closing. The shares had been higher before they slumped 6% to £14.70 to the biggest faller in the FTSE 100.

The attack on Standard Chartered – accused of "willful and egregious violations of law" – is a severe blow to the reputation of the bank, which until last night had been regarded as the most solid of any of the London-listed banks after the 2008 taxpayer bailouts, the more recent Libor rigging scandal at Barclays, and the money laundering offences at HSBC.

Its top management team – chief executive Peter Sands and finance director Richard Meddings – have been held in such regard that only last week they were fending off questions about their potential candidacies for governor of the Bank of England or joining Barclays in the wake of the Libor scandal. Meddings was Standard Chartered's executive director for risk until his promotion to finance director in November 2006. Lord Turner, current head of the Financial Services Authority, sat on the board for two years starting in 2006. Former British prime minister John Mayor began his career at the bank.

The 27-page report claims Standard Chartered bankers helped Iranian clients skirt US financial sanctions against their country for close to a decade.

Benjamin Lawsky, superintendent of the NYSDFS, said a Standard Chartered subsidiary in New York had also sought to do business with other US sanctioned countries including Libya, Burma and Sudan.

It is the latest blow to the reputation of the City, already under fire in Washington following the HSBC money-laundering debacle and JP Morgan's multibillion-dollar trading losses at its London office. "It seems to be that every big trading disaster happens in London," New York congresswoman Carolyn Maloney told a Congressional panel investigating the JP Morgan fiasco in June.

The New York regulator has provided emails between members of staff. In one the head of the US operations warns, among others, the executive director of risk in London, that the dealings with Iran could cause "very serious or even catastrophic reputational damage" to the group. The email, dated October 2006, warned "there is equally importantly potential of risk of subjecting management in US and London (eg you and I) and elsewhere to personal reputational damages and/or serious criminal liability." It was this memo that provoked the response about "you fucking Americans".

Financial transactions with Iran have been subject to US sanctions since 1979. Limited, highly scrutinised transactions known as "U-turns" were allowed as long as the money ends up in non-Iranian banks.

In 2008 the US treasury revoked authorisation for U-Turn transactions because it suspected Iran was using its banks to finance its nuclear weapons and missile programmes and to finance terrorist groups, including Hezbollah and Hamas.

According to Lawsky, Standard Chartered set up an operation known as "Project Gazelle" aimed at helping Iranian banks put money through the US financial system.

According to the report:

For almost 10 years, SCB [Standard Chartered Bank] schemed with the government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250bn, and reaping SCB hundreds of millions of dollars in fees. SCB's actions 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 … In short, SCB operated as a rogue institution.

In one example from 2001 detailed in the report Standard Chartered was approached by Iran's CBI/Markazi, Iran's central bank, to act as recipient for daily oil sales from the National Iranian Oil Company.

Iranians warned the bank that disclosure of their identities to US banks would cause "unacceptable delays in clearing funds," according to the report.

The bank took legal advice and was told it "should ascertain that the payments are authorized". Instead it "conspired with Iranian clients to transmit misinformation to the New York branch by removing and otherwise misrepresenting wire transfer data that could identify Iranian parties," the report claims.

Standard Chartered was unprepared for the scale of the criticism, despite having made disclosures in previous annual reports – and in its interim report last week – about discussions with the US over breaking sanctions. It would only repeat this yesterday, saying: "As reported previously, the Group is conducting a review of its historical US sanctions compliance and is discussing that review with US enforcement agencies and regulators. The group cannot predict when this review and these discussions will be completed or what the outcome will be".

See also: http://www.businessinsider.com/standard-chartered-complaint-quote-you-fcking-americans-2012-8#ixzz22nWO0WEB