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Bank, N.Y. regulator settle Iran money laundering probe

Standard Chartered

REUTERS

A woman walked down the stairs of the Standard Chartered headquarters in Hong Kong in this Oct. 13, 2010 file photo.

Standard Chartered Plc settled a New York money laundering probe for $340 million a day before the bank was to appear at a hearing to defend its right to continue operating in the state. It still faces federal probes over allegations it helped Iran funnel money through the U.S.

As part of the agreement, the bank agreed to install an on- site monitor for at least two years who will report directly to state officials. New York regulators will also place examiners at the bank. As a result of the accord, announced today by the state in an e-mailed release, the hearing that had been scheduled for tomorrow has been adjourned.

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On Aug. 6, Benjamin Lawsky, head of the New York Department of Financial Services, or DFS, issued an order accusing Standard Chartered of helping Iran launder about $250 billion in violation of federal laws. One analyst estimated loss of the bank’s New York license could result in a 40 percent drop in earnings.

“The New York State Department of Financial Services and Standard Chartered Bank have reached an agreement to settle the matters raised in the DFS Order dated Aug. 6, 2012,” Lawsky said in the statement. “The parties have agreed that the conduct at issue involved transactions of at least $250 billion.”

The settlement amount is the largest ever paid to an individual regulator as part of a money laundering accord. In June, ING Bank NV agreed to pay $619 million to settle similar allegations. That sum was split evenly between a $309.5 million payment to the federal government and an equal sum to the New York District Attorney’s office.

$700 Million

A person familiar with the New York state case said that Lawsky had sought as much as $700 million to settle his investigation. Yuki Finch, a spokeswoman for Standard Chartered in London, declined to immediately comment on the deal.

The resolution still leaves the London-based bank the subject of investigations by the U.S. Treasury, the Federal Reserve Bank, the Justice Department and the Manhattan District Attorney. Lawsky said that the agency will “continue to work with our federal and state partners on this matter.”

The DFS was created in 2011 when New York’s Banking Department and Insurance Department were abolished, with their functions and authority transferred to the new regulator, under Lawsky. The agency has the power to issue regulations, investigate and fine financial services companies. It may also probe alleged criminal activity and refer its findings to the state’s attorney general for prosecution.

“We created the Department of Financial Services because we believed that New York needed a tough and fair regulator for the banking and insurance industries to protect consumers and investors,” New York Governor Andrew Cuomo said today in a statement. “This result demonstrates the effectiveness and leadership of the new Department of Financial Services, and I commend the state legislature for creating a modern regulator for today’s financial marketplace.”

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