British bank 'laundered $250bn for Iran regime'


Standard Chartered, one of Britain's most distinguished global banks, has been accused by US regulators of laundering $250bn from Iran and behaving like a "rogue institution", in the latest catastrophic blow to the international reputation of the City of London.

In an explosive legal order last night, New York state's Department of Financial Services accused the New York branch of the 160-year-old institution of leaving the US financial system "vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes" through its "flagrantly deceptive actions" between 2001 and 2010.

The regulator said that the branch of the UK-based bank had earned millions of dollars in fees by "conspiring" with the pariah Gulf state in around 60,000 "secret transactions".

This behaviour, according to the regulator, had been purely "motivated by greed" on the part of Standard Chartered. The regulator also said it had uncovered evidence of similar schemes by Standard Chartered to conduct business with Libya, Burma and Sudan, all of which have been subject to sanctions by the US.

The bank has been threatened with having its US banking licence revoked and has been ordered to appear before the regulator soon to explain these apparent violations. The accusations are the latest blow to the reputation of the British banking sector. In July, a United States Senate panel found that HSBC was used by Iranians looking to evade sanctions and by Mexican drug cartels.

And in June, Barclays was fined £290m by UK and US regulators after the bank admitted that it had manipulated the Libor interest rate, which is used to set the prices of trillions of dollars worth of loans around the world, to inflate the bonuses of traders in its investment bank.

The latest accusations are a potential disaster for Standard Chartered which was, until now, the only global UK bank which emerged from the 2008 financial crisis with is reputation for financial prudence intact.

Standard Chartered's chief executive, Peter Sands, has been one of the most vocal opponents of new regulations that have been advanced in recent years to curb the excesses of the financial sector. Mr Sands had even been promoted in some quarters as a possible replacement for Sir Mervyn King as Governor of the Bank of England.

But the New York regulator said yesterday that the wrongdoing was sanctioned by Standard Chartered's "most senior management". It reported that one senior director, when warned of the US sanctions, had said: "You f***ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians?"

The regulator laid out allegations of how Standard Chartered had systematically falsified business records, obstructed regulators and failed to record transactions.

In response to the allegations, the bank said that it was conducting a review of its historical US sanctions compliance which it was discussing with US enforcement agencies and regulators. It said in a statement: "The group cannot predict when this review and these discussions will be completed or what the outcome will be."

The New York regulator also said that Standard Chartered's accountants, Deloitte & Touche, "apparently aided" the bank's "deception" in relation to the money laundering. The regulator said that Standard Chartered moved money into the US on behalf of clients including the central bank of Iran and the state-owned Bank Saderat and Bank Melli.

The nine-month inquiry, led by Benjamin Lawsky, the Superintendent of the New York Department of Financial Services, involved looking through more than 30,000 pages of documents, including internal Standard Chartered emails.

Senior management at the bank are said to have codified their laundering procedures – known as "wire-stripping" – in formal operating manuals. According to the order, these "provided step-by-step wire stripping instructions for any payment messages containing information that would identify Iranian clients".

The US-dollar transactions in question originated and terminated in European banks in the UK and the Middle East, and were cleared through its New York branch.

The regulator's order was issued just before the close of the London stock market where Standard Chartered is listed.

The bank's share price fell by 6 per cent to 1470p leaving it valued at £35.7bn.

Born out of the empire: an Asian giant

Standard Chartered's roots lie in the fertile soil of the British Empire and the explosion of trade of the 19th century. The Scottish businessman and Liberal politician James Wilson was granted a banking charter by Queen Victoria in 1853. His Chartered Bank set up shop in Bombay, Calcutta and Singapore, where it financed the tea, indigo, sugar, and hemp trade between Britain and her colonies.

Meanwhile, the Standard Bank was established by a Scottish émigré, John Patterson, in 1862 in South Africa, where it furnished diamond and gold miners with loans.

The two banks were brought together in 1969. Today, despite being listed and headquartered in London – and being highly visible in the UK as a sponsor of Liverpool Football Club – Standard Chartered is primarily focused on Asia. It is one of the biggest foreign providers of credit to households and firms in China, and has 1,700 branches worldwide.

According to its most recent annual report, Standard Chartered's global operation generated revenues of $17.6bn and $5bn in profits in 2011.

Standard Bank and Standard Chartered’s relationship ended in 1987 when Standard Chartered sold its 39 per cent stake in Standard Bank. Standard Bank has since operated as a standalone operation and would like to stress the there is no longer a relationship between the two companies.

REX/Eye Candy
A photo of Charles Belk being detained by police on Friday 22 August
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
In Eternal Sunshine of the Spotless Mind Jim Carrey and Kate Winslett medically erase each other from their memories
scienceTechnique successfully used to ‘reverse’ bad memories in rodents could be used on trauma victims
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

Trade Desk FIX Analyst - (FIX, SQL, Equities, Support)

£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?