HOT on the heels of HSBC’s admission of money laundering, Asian-focused Standard Chartered has become the latest lender to fall foul of tough US sanctions.
The string of revelations against the two banks plays into the hands of ANZ, the Australian lender attempting to grow aggressively through Asia.
The New York State Department of Financial Services alleged overnight that for almost a decade London-based Standard Chartered ”schemed” with the government of Iran and hid from regulators about 60,000 transactions involving at least $US250 billion.
The claim argues that Standard Chartered reaped hundreds of millions of dollars in fees from the transactions.
A 27-page filing by the New York regulator is tied to an order for Standard Chartered executives to appear at a US hearing next Wednesday.
”[Standard Chartered’s] actions left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes,” the filing said.
Standard Chartered risks having its New York licence revoked – essentially preventing it doing business in the US. It could also be required to submit to ”independent, on-premises monitoring” of client transactions by an organisation nominated by the New York regulator – and it may incur a big fine, to boot.
Under US law, transactions with Iranian banks are strictly monitored and subject to sanctions because of government concerns about possible financing of Iran’s nuclear programs and allied terrorist organisations.
As an emerging rival in the Asian region, ANZ arguably stands to benefit from any loss to the reputation – and operations – of Standard Chartered.
For its part, Standard Chartered issued a statement that it ”strongly rejects the position or the portrayal of facts as set out” in the Department of Financial Services claim.
”The group does not believe the order issued by the DFS presents a full and accurate picture of the facts,” the statement said.
All this, including the prospect of strict US monitoring, is something that could represent a major turnoff for Standard Chartered’s Asian-based clients.
Bigger rival HSBC is also likely to be distracted for the medium term after its apology last week for ”shameful” systems breakdowns that failed to stop it laundering money for terrorists and drug barons. Most of the affair relates to HSBC’s Mexican operations, and Europe’s biggest bank has set aside $US700 million for potential fines in the US.
HSBC will also spend $US400 million beefing up compliance around the world, something that could again put emerging market customers offside.
While HSBC and Standard Chartered have substantially bigger franchises through Asia, ANZ has been targeting business and trade clients of both banks as part of efforts to expand its balance sheet through emerging markets, particularly in east Asia.
This story Administrator ready to work first appeared on Nanjing Night Net.