Standard Chartered Defiant At Money Laundering Charges
When HSBC was accused of laundering money in violation of US sanctions, they apologised and humbled themselves, meekly paying the fee US financial regulators assessed. But Standard Chartered is adamant they did nothing wrong by doing business with Iran and is pushing back at US authorities.
After the scandal broke yesterday, Standard’s stock prices plunged almost 15pc. Today the bank issued a statement that it “strongly rejects the position and portrayal of facts” by the yanks and says “99.9pc of the transactions relating to Iran complied with regulations” and the New York regulators were not giving a “full and accurate picture of the facts.”
They said they’ve been co-operating with the investigation, providing documents and have given the New York regulator regular updates. Standard added that they “intend to discuss these matters with the DFS (New York State Department of Financial Services) and to contest their position.”
But defiance seems to be the theme at Standard Chartered when it comes to their views on doing business with Iran. In October 2006 the Standard’s US head of operations reached out with a “panicked message to the group executive director in London” warning that continuing to transact with Iranian clients could lead to “catastrophic reputational damage.”
The London executive lashed out at its own employee in an expletive-filled rant saying, “You f****** Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.” I can answer that – it’s not just US regulators that have placed sanctions on transactions with Iran – it’s also Canada and our own UK regulators.
Iran is hard at work on arming itself with nukes and is rapidly progressing toward having an nuclear arsenal frighteningly close to the UK – much closer than it is to the yanks. Standard Chartered can be defiant toward the yanks all they want –but they do need to respect our sanctions.
Standard faces a hearing Monday in New York and bringing with them their defiant attitude may cost them their banking licence in the states. Their flagrant behaviour risks shareholder profits – the inability to operate in the states would cripple the UK headquartered bank.
In addition to putting shareholder value at risk, the actions of Standard Chartered are another black eye on the reputation of UK banking and London as a responsible global financial centre and their non-apologetic attitude will serve no one well.
Until this scandal broke, Standard Chartered had held itself above the messy fray that has embroiled UK banks for the past several years. And it’s not just the shareholders that are at risk – the careers of those in charge at Standard are on the line. Chief exec Peter Sands has been whispered as a replacement for BoE’s Lord King and Standard’s finance director Richard Meddings has been rumoured as a replacement for Bob Diamond.
I can’t imagine either of these bankers will be wanted if the accusations are proved out. Standard Chartered is the UK’s second largest bank in market value after HSBC, although it offers no branches here, concentrating them instead in Asia, Africa and America.
In its half year report of 122-pages, it devoted one short paragraph to the money laundering accusations. Standard apparently was advised on how to disguise its illegal transactions with Iran by accounting firm Deloitte and may have also been laundering money for other rogue nations including Libya, Burma and Sudan.
I’m interested to see how this progresses and whether UK lawmakers step in to the money laundering accusations of either HSBC or Standard Chartered to see what UK regulations the banks were breaking and what they intend to do about it. It shouldn’t just be the yanks meting out justice to our rogue banks – our regulators need to show the world they’re capable of administering a global banking centre and keeping banks in line!
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