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Standard Chartered falls most in 24 years amid inquiry of Iran money laundering

NEW YORK — Top executives at Standard Chartered said they were surprised when New York’s banking regulator accused them on Monday of scheming with the Iranian government to launder billions of dollars to potentially support terrorist activities.

They were not the only ones caught off guard.

The regulatory order also stunned other authorities investigating the bank, namely officials at the Federal Reserve and the Justice Department, according to several people close to the case.

The agencies involved, including the Treasury Department, disagree over just how expansive the suspected wrongdoing was at Standard Chartered.

Benjamin M. Lawsky, a former prosecutor who now leads the state banking regulator, claimed the bank had processed $250 billion in tainted money while cloaking the identities of its Iranian clients by stripping their names from paperwork. Some federal authorities, though, believe that the amount is much smaller, perhaps in the millions.


Standard Chartered, for its part, said that only $14 million did not comply with regulations.

The wide disparity stems from different interpretations of how many Standard Chartered transactions violated a federal law that governs the way money from abroad moves through the US financial system.

Standard Chartered maintains that ‘‘99.9 percent’’ of the transactions under scrutiny complied with that law and involved legitimate Iranian banks and corporations. Furthermore, the bank argued that it had examined the transactions and found that they had nothing to do with terrorist activities.

Some Treasury Department officials, while still reviewing the transactions, suspect that Lawsky has taken too broad a view, according to people briefed on the matter. The officials think that some of the transactions, though perhaps questionable, were not necessarily illegal.

Lawsky, however, said that Standard Chartered’s deliberate efforts to mask the identity of its clients points to wrongdoing and further suggests that the bank had not fully scrutinized the transactions.


The Fed, which has been investigating the bank since 2010, still is not sure how vast the scheme was. For that reason, it has not yet taken any action, according to people briefed on the matter who spoke anonymously because the investigation was not public. Similarly, the Justice Department is still determining whether to bring a criminal case.

Before Monday, these authorities were not expecting Lawsky to act. In money laundering cases, authorities almost always move in concert. Lawsky’s order against Standard Chartered irked many of the other regulators, who questioned whether he had moved too quickly.

Standard Chartered, in a statement rejecting Lawsky’s claims, said it ‘‘voluntarily approached’’ agencies in 2010 including the New York Department of Financial Services, Justice Department, Federal Reserve Bank of New York, and New York district attorney.

“Resolution of such matters normally proceeds through a co-ordinated approach by such agencies,’’ the bank said.