“You f---ing Americans. Who are you to tell us, the rest of the world, that we‟re not going to deal with Iranians.” -- Standard Chartered Bank's Group Executive Director in response to an internal warning about the bank's scheme for hiding transactions on behalf of Iranian clients.
On August 6, New York state's banking superintendent, Benjamin Lawsky, filed an order that could strip Standard Chartered Bank (SCB) of its license to conduct business in New York. The order contained explosive allegations that SCB systematically covered up 60,000 Iranian transactions worth upwards of $250 billion by falsifying business records and financial instruments and by cooking its books.
According to the order, the transactions in question occurred from 2001-2010, but the general scheme to cover up Iranian transactions was initiated immediately after the transactions were prohibited in 1995.
The alleged corruption is staggering. Through these transactions, SCB enabled the Iranian regime and may have helped it to "finance terrorist groups, including Hezbollah, Hamas and the Palestinian Islamic Jihad." Further, by covering up the transactions, SCB kept bank regulators in the dark about its actual risks. It appears that SCB has concealed transactions for other regimes as well.
More staggering still, SCB's procedures have been under investigation for some time by the New York Fed, the Justice Department, and the Manhatten District Attorney. If Lawsky hadn't acted, it's likely that the case would have been quietly settled, as a string of other illegal transactions cases have--if there had been any action at all.
For his trouble, Lawsky appears to have drawn the ire of other banking regulators, especially in the U.K., for not following the club rules and for making the charges public.
Those regulators seem over-concerned with protecting rogue banks instead of having those banks follow the law.
Thank goodness an actual regulator appears to be on the job.