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Standard Chartered denies Iran laundering allegations

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UK-listed banking giant Standard Chartered saw its shares fall more than 7% at one stage in Hong Kong this morning as it faces allegations of assisting in a $250bn money laundering scheme.
Standard Chartered denies Iran laundering allegations

Standard Chartered – a key holding for many UK investors, particularly income funds – is accused of enabling Iranian banks and corporations to hide roughly 60,000 transactions worth at least $250bn within the bank, New York state’s banking regulator has said.

The New York State Department of Financial Services has accused the British bank’s subsidiary – Standard Chartered Bank (SCB) – of hiding the transactions in order to gain hundreds of millions of dollars in fees from January 2001 through 2010.

In a statement, Standard Chartered said it “strongly rejects the position and portrayal of facts” as laid out in the allegations.

According to the New York banking regulator, SCB “schemed” with the government of Iran and hid from regulators about 60,000 secret transactions, involving at least $250bn, 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,” it said in a statement.

The bank’s shares fell sharply just before trading ended in London on Monday, closing 6.19% lower at £14.70.

The US authorities are threatening to revoke a number of key banking licences which allow Standard Chartered to operate in the US. It added the SCB will face the authorities later this month “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.”

The statement added Standard Chartered had engaged in the following activities in “its evident zeal to make hundreds of millions of dollars at almost any cost”:

• falsifying business records;
• offering false instruments for filing;
• failing to maintain accurate books and records of all transactions effected and all actions taken on behalf of SCB;
• obstructing governmental administration;
• failing to report misconduct to the Department in a timely manner;
• evading Federal sanctions.

Standard Chartered said in a statement: “As reported previously, 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.”

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