One of the world's biggest banks has denied helping Iran hide billions of dollars in illegal transactions, reports Faisal Kidwai
Standard Chartered on Tuesday denied it hid $250 billion in transactions with Iranian banks in violation of US sanctions.
It issued the denial after the New York's Department of Financial Services threatened to revoke its licence and impose fines for helping Iran circumvent the ban on financial transactions.
"The group strongly rejects the position or the portrayal of facts as set out in the order issued by the DFS," group company secretary Annemarie Durbin said in a statement.
"The group does not believe the order issued by the DFS presents a full and accurate picture of the facts."
On Monday, the bank was accused in the United States of operating a rogue unit that helped Iran hide more than $250 billion in illegal transactions for nearly a decade.
Benjamin Lawsky, Superintendent, DFS, claimed in a 27-page report that even though the US had banned all financial dealings with Iran, Standard Chartered continued to deal with the country through an operation known as 'Project Gazelle'.
The report alleges that "for almost 10 years, SCB [Standard Chartered Bank] schemed with the government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion, and reaping SCB hundreds of millions of dollars in fees. SCB's actions left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity
In short, SCB operated as a rogue institution".
Although financial transactions with Iran have been subject to US sanctions since late 1970s, limited dealings were allowed, but even that was banned in 2008 because it suspected Iran of using its banks to finance its nuclear weapons and missile programmes.
The report says about 60,000 illegal transactions were involved and it was helped by its consultant Deloitte & Touche.
It alleges that the bank removed or misrepresented wire-transfer data that could identify Iranian parties. Instead of using real names, Iranian clients were asked to write 'no name given' or 'SCB', which helped them hide the fact that the transaction originated from an Iranian bank.
The regulator claims many bank employees, including risk and compliance officers, legal counsel, and officials in public affairs, sales and banking, knew about the illegal transactions.
After the 2008 sanctions, the bank's general counsel devised a plan with the chief compliance officer to have the London branch ignore regulations and keep New York's office in the dark so US regulators couldn't prosecute a breach against the London or New York branches, according to The Wall Street Journal.
The general counsel said the memo 'must not be sent to the US', says the paper.
Lawsky says the bank moved money through its New York branch on behalf of such clients as Central Bank of Iran, Bank Saderat and Bank Melli.
The bank had earlier said: "The group is conducting a review of its historical US sanctions compliance and is discussing that review with US enforcement agencies and regulators. The group cannot predict when this review and these discussions will be completed or what the outcome will be."
If found guilty, the bank could lose its license to trade in New York, which will be a major setback, and its senior executives have been told to come for a meeting with the regulator later this month.
The accusations are far more serious than those involving HSBC, which was recently accused by the US Senate of failing to prevent money laundering from countries around the world, including Iran and Mexico.