Standard Chartered office
Standard Chartered Plc (STAN) might be asked to pay as much as $700 million to resolve money laundering allegations filed by New York’s banking superintendent after his department grew impatient with inaction by federal regulators, a person familiar with the case said.
Benjamin Lawsky, who heads up New York’s Department of Financial Services, tried unsuccessfully a few months ago to get U.S. regulators to punish the London-based bank for conduct involving disguised Iranian money transfers, said the person, who asked not to be identified because the matter is confidential. The transfers have been under investigation by federal agencies for more than two years, according to Lawsky’s Aug. 6 order.
A settlement of $700 million would match the amount that HSBC Holdings Plc (HSBA) set aside last month after a Senate committee found the bank gave terrorists, drug cartels and criminals access to the U.S. financial system. A payment of that sum by HSBC would be the largest paid by any bank so far.
Other foreign banks that have resolved allegations of executing wire transfers on behalf of sanctioned nations or groups include Barclays Plc (BARC), Credit Suisse Group AG (CSGN), Lloyds Banking Group Plc and ABN AMRO Group NV. In each of these cases, the settlements involved joint investigations by regulators.
According to Bloomberg, Standard Chartered climbed 4.4 percent to 1,282.5 pence at 8:12 a.m. in London trading today. The shares had slumped 22 percent in London since the Aug. 6 order, erasing 8 billion pounds ($12.5 billion) of market value.
Lawsky’s decision to move forward alone is unusual, said Jimmy Gurule, a former Treasury Department undersecretary for enforcement who now teaches at the University of Notre Dame in South Bend, Indiana.
“In the past six to seven cases involving institutions violating U.S. sanctions, this is the only one where a regulator acted unilaterally,” he said.
David Neustadt, spokesman for New York’s Department of Financial Services, declined to comment on the reasons for Lawsky’s actions.
Standard Chartered will “vigorously” contest the regulator’s findings, Chief Executive Officer Peter Sands said in a memorandum to employees obtained by Bloomberg News.
“The bank remains in good shape and open for business for our customers and clients,” Sands told employees yesterday. Eva Ang, a Singapore-based spokeswoman at Standard Chartered, declined to comment. A hearing over whether the bank’s license to operate in New York should be revoked is slated for Aug. 15.