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US regulators ask Standard Chartered to pay $300 mn penalty

New York City News
20 Aug 2014, 11:48 GMT+10

NEW YORK - Standard Chartered Bank was Tuesday ordered to pay a $300 million fine to settle allegations the British-based multinational failed to detect potentially suspicious transactions at its New York branch.

The British bank is getting fined for a second time over lapses in its anti-money-laundering controls.

The New York Department of Financial Services (DFS) said Standard Chartered Bank's internal compliance systems had failed to detect or act on a large number of "potentially high-risk transactions" mostly originating from Hong Kong and the United Arab Emirates.

As further punishment, the bank will suspend US dollar clearing a key financial tool for international banks that want to use the currency for some of its high-risk clients for an open-ended period of time.

The new punishment came two years after the bank paid US regulators US$667 million to settle charges of having violated US sanctions by handling thousands of money transactions involving Iran, Myanmar, Libya and Sudan.

A DFS monitor appointed in 2012 to keep an eye on the bank discovered that it had not detected the allegedly high-risk transactions from Hong Kong and the UAE and reported them as it should have, the department said.

"If a bank fails to live up to its commitments, there should be consequences. That is particularly true in an area as serious as anti-money-laundering compliance, which is vital to helping prevent terrorism and vile human rights abuses," said DFS head Benjamin Lawsky.

In a corporate statement, Standard Chartered said the settlement would not jeopardize its U.S. licenses and would have no effect on most of its clients and businesses. The bank said it would individually notify and work with affected clients in Hong Kong and the United Arab Emirates.

"The Group accepts responsibility for and regrets the deficiencies in the anti-money laundering transaction surveillance system" at its New York branch, the bank said. "The Group has already begun extensive remediation efforts and is committed to completing these with utmost urgency."

The consent order also requires the bank to:

Suspend U.S. dollar-clearing operations for high-risk retail business clients of Standard Chartered Bank Hong Kong.

Continue a previously launched process of exiting high-risk small and medium business clients at the bank's branches in the United Arab Emirates.

Open no new U.S. dollar demand deposit accounts for any new customers without approval from the New York Department of Financial Services.

Extend the outside monitoring of the bank required under the 2012 settlement for an additional two years.

Establish a comprehensive remediation plan to tighten money-laundering detection and reporting.

The measures will remain in effect until the New York regulator determines that the bank's transaction surveillance system meet acceptable standards.

Standard Chartered shares closed up fractionally Tuesday in London trading.

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