Econintersect: The New York office of London's Standard Chartered Bank reached a settlement agreement on Tuesday (14 August 2012) with the New York State Department of Financial Services (NYSDFS). The bank agreed to pay NYSDFS $340 million dollars and to admit extraodinary on site regulation of anti money-laundering exposures and auditing of anti money-laundering due dilligence.
It appears that this civil settlement may not completely shut the door on the possiblity of criminal investigation. The final statement of the settlement announcement indicated that NYSDFS would continue to work with their "federal and state partners on this matter."
Here is the text of the press release announcing the settlement:
Benjamin M. Lawsky, New York Superintendent of Financial Services, issued the following statement today.
"The New York State Department of Financial Services ("DFS") and Standard Chartered Bank ("Bank") have reached an agreement to settle the matters raised in the DFS Order dated August 6, 2012. The parties have agreed that the conduct at issue involved transactions of at least $250 billion.
"The settlement also includes the following terms:
· The Bank shall pay a civil penalty of $340 million to the New York State Department of Financial Services.
· The Bank shall install a monitor for a term of at least two years who will report directly to DFS and who will evaluate the money-laundering risk controls in the New York branch and implementation of appropriate corrective measures. In addition, DFS examiners shall be placed on site at the Bank.
· The Bank shall permanently install personnel within its New York branch to oversee and audit any offshore money-laundering due diligence and monitoring undertaken by the Bank.
“The hearing scheduled for August 15, 2012 is adjourned.
"We will continue to work with our federal and state partners on this matter."
The summary of the charges from the August 6 filing:
For almost ten years, SCB 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 U.S. 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.
Among the actions called for in the charges:
IT IS NOW HEREBY ORDERED that, pursuant to Banking Law § 39(1), SCB shall appear before the Superintendent or his designee on Wednesday, August 15, 2012, at 10:00 a.m., at the Department's offices located at One State Street Plaza, New York, NY 10004, to explain these apparent violations of law and to demonstrate why SCB‟s license to operate in the State of New York should not be revoked; and
IT IS HEREBY FURTHER ORDERED that, on August 15, 2012, SCB shall also demonstrate why, pursuant to Banking Law § 40(2), SCB‟s U.S. dollar clearing operations should not be suspended pending a formal license revocation hearing; and . . . . .
The reason for the agreement to pay up so quickly (only 8 days after the charges were filed) is evident once one realizes the next (9th) day the bank was scheduled to discuss criminal activity with the Dept. of Financial Services. It seems it was better to reach an agreement to pay a fee and sweep the details under the rug than to drag the bank through a public mud bath.
Another item in the cost of doing business.
- Charges Against Standard Charter Bank (NYS Dept. of Financial Services, 06 August 2012)
- Statement from Benjamin M. Lawsky, Superintendent of Financial Services, Regarding Standard Chartered Bank (Press Release NYSDFS, 14 August 2012)