Experts are warning that new investigations into potential Iran sanctions busting by Standard Chartered will add to pressure on all Western banks not to return to the country despite US President Barack Obama’s moves to normalise trade relations.
Reports yesterday suggested that Standard Chartered had continued to seek Iranian business long after it agreed to stop in 2007 and more than a year after it agreed to pay $667m (£428m) in fines to the US authorities in 2012.
Documents cited in the Financial Times suggest the bank was actively pursuing potential Iranian clients in 2009, including the then-sanctioned National Iranian Oil Company.
The allegations raised the prospect of Standard Chartered possibly facing further draconian action from US regulators including the possible withdrawal of its licence to clear transactions made in dollars. Such a withdrawal would be catastrophic for an international bank such as Standard Chartered.
Shares in the company fell 30.6p to 692.1p yesterday, highlighting the extent of the problem for its new chief executive Bill Winters.
Standard Chartered told the FT it was co-operating with US investigations into possible sanctions violations and said it had a number of “legacy obligations” in Iran which it was dealing with appropriately following its decision to exit in 2007.
But Ross Denton, a partner and sanctions expert at law firm Baker & McKenzie, said yesterday: “Quite a few regulators in the US would like to see Standard Chartered’s head on their wall over this issue. Any discussion about a withdrawal of its dollar licence would be disastrous.”
He predicted that US and European banks could refuse to do any business with Iran as a result of the aggressive US approach, which last year saw BNP Paribas pay $8.9bn in fines and have some dollar clearing rights suspended.
Experts said this fear among banks about dealing with the country would make a mockery of Mr Obama’s landmark decision to relax sanctions.
Mr Denton said: “I can’t see any Western banks wanting to get involved with Iran for a long time. So if companies want to work out there, they’ll have to do it in euros and with banks from Russia, China or India. It’s going to be difficult and take time. Jump the gun, cut corners, and you’re going to get absolutely murdered in the US.”
The idea of major Western companies having to open new bank accounts with what are essentially small, emerging-market banks would also trigger serious concerns in many boardrooms.
Meanwhile the latest allegations shine yet more poor light on Standard Chartered’s attitude towards international sanctions. A former employee talked of a “cavalier” attitude towards compliance, where management encouraged staff aggressively to pursue business in countries such as Iran and Iraq.Reuse content