State Department of Financial Services Superintendent Benjamin Lawsky announced this afternoon that the agency and Standard Chartered Bank reached an agreement to settle matters in Lawsky’s Aug. 6 order against the bank.
Lawsky had alleged that the British bank had “schemed with the Government of Iran and hid from regulators roughly 60,000 secret transactions” for nearly 10 years. The transactions totaled at least $250 billion, and the bank reaped hundreds of millions of dollars in fees. Lawsky said in the order (see below) that the bank’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.”
The settlement terms include a requirement that the bank pay a civil penalty of $340 million to the Department of Financial Services. The bank agreed to install a monitor for at least two years who will report to the Department of Financial Services on whether there are appropriate money-laundering risk controls in the New York branch. The state agency will have examiners on site at the bank. Standard Chartered Bank has to hire personnel within its New York branch to oversee and audit any offshore money-laundering monitoring it does.
“We will continue to work with our federal and state partners on this matter,” said Lawsky, who caught some flak from federal regulators for filing the order last week.
Gov. Andrew Cuomo said the state merged the Banking and Insurance departments into the Department of Financial Services last year so it would have a “tough and fair regulator for the banking and insurance industries to protect consumers and investors.”
“This state and nation are still paying the price for a failed regulatory system and that must not happen again. This result demonstrates the effectiveness and leadership of the new Department of Financial Services,” he said in a statement.
Assembly Speaker Sheldon Silver, D-Manhattan, said in a statement that the penalty is a fair one “for the bank’s decision to conduct improper transactions with Iranian clients. Make no mistake, the state of Iran is a worldwide sponsor of terrorism and is committed to the destruction of Israel, the United States, and the entire free world.”