New York: British bank Standard Chartered will pay a penalty of USD 327 million to US federal and state agencies to settle allegations that it illegally moved millions of dollars through the US financial system on behalf of sanctioned Iranian, Sudanese, Libyan and Burmese entities.
The penalty includes USD 100 million which the bank would pay to the Federal Reserve and USD 227 million to the US Department of Justice and the District Attorney for New York County.
"For years, Standard Chartered Bank deliberately violated US laws governing transactions involving Sudan, Iran, and other countries subject to US sanctions," Assistant Attorney General Lanny Breuer of the Justice Department's Criminal Division said. "Standard Chartered's conduct was flagrant and unacceptable," he said.
A criminal information was filed in federal court in the District of Columbia today charging Standard Chartered with one count of knowingly and willfully conspiring to violate the International Emergency Economic Powers Act.
The bank has waived the federal indictment and has accepted responsibility for its criminal conduct and that of its employees, the Justice Department said in a statement.
The bank operates a branch in New York that provides wholesale banking services, primarily US-dollar clearing for international wire payments.
According to court documents, from 2001 through 2007 the bank violated US and New York state laws by moving millions of dollars illegally on behalf of Iranian, Sudanese, Libyan and Burmese entities subject to American economic sanctions.
The bank's "willful criminal conduct" resulted in over 200 million dollars being processed in transactions that otherwise should have been rejected, blocked, or stopped for investigation under regulations relating to transactions involving sanctioned countries and parties.
The Justice Department said that in addition to evading US economic sanctions, the bank also made misleading statements to regulators to further conceal its business with sanctioned countries.
In August 2003, the bank wrote in a letter to the Treasury Department's Office of Foreign Assets Control that the use of cover payments for transactions related to sanctioned countries was contrary to its global instructions.
However, the bank used the cover payment method to effect billions of dollars in payments originating from Iran, Libya, Burma and Sudan through its New York branch.
During an extensive examination, the bank failed to disclose to the Federal Reserve Bank of New York and New York Department of Financial Services that it was processing billions of dollars of non-transparent payments for customers in sanctioned countries.
Due to the actions taken by the bank to remedy its conduct and its willingness to acknowledge responsibility for its actions, the Justice Department would recommend the dismissal of the criminal complaint in 24 months provided the bank fully cooperates with and abides by the terms of the deferred prosecution agreement, the Justice Department said.
In a separate agreement entered into with the Federal Reserve, Standard Chartered would have to improve its programme for compliance with US economic sanctions and anti-money-laundering requirements.