Whether or not Standard Chartered is guilty of sanctions-busting, the US regulator that brought the charges has questions to answer about its conduct in the affair.
According to New York State's Superintendent of Financial Services, the British bank laundered $250bn of Iranian money through its subsidiary in the Big Apple, breaking the law and leaving the US "vulnerable to terrorism". Standard Chartered is, says Benjamin Lawsky's incendiary report, a "rogue institution" that has engaged in a "carefully planned deception".
If the charges stick, they are grave ones indeed. And if Mr Lawsky's threat to strip the bank of its licence is carried out, it would be a body blow to its Asia-focused, strongly international business model. Standard Chartered, however, tells a very different story, claiming that 99.9 per cent of the disputed transactions complied with the law, while those in breach were "small clerical errors" only. Efforts to scrub identifying marks were no conspiracy, it says, just normal practice.
Who to believe? At next week's formal hearing, much will turn on complex legal questions around sanction exemptions and so-called "U-turn" currency transfers. Clarity cannot come soon enough; and if the accusations stand up, Standard Chartered must, of course, answer for what would be serious wrongdoing.
But Mr Lawsky's unduly sensationalist approach has not only bitten a chunk out of the bank's value (even with yesterday's share price bounce) before any charges are proved. It has also prompted British bankers and politicians to talk darkly of "self-interested" attacks by US regulators on London's financial dominance. Such friction is not only unhelpful, it could easily have been avoided. Meanwhile, it is notable that the several other US watchdogs involved in the investigation have so far kept quiet.
The Governor of the Bank of England tried to calm the rhetoric yesterday. But the damage has already been done. It is up to Standard Chartered to prove its innocence. But it should not have had its reputation – and that of the City – so publicly shredded first.