NEW YORK CITY: New York state’s banking regulator hit Standard Chartered Bank with a $300 million fine and restrictions on its dollar-clearing business on Tuesday (Wednesday in Manila) for not detecting possible money laundering.
The New York Department of Financial Services (DFS) said the British bank’s internal compliance systems had failed to detect or act on a large number of “potentially high-risk transactions” mostly originating from Hong Kong and the United Arab Emirates.
The new punishment came two years after the bank paid US regulators $667 million to settle charges it violated US sanctions by handling thousands of money transactions involving Iran, Myanmar, Libya and Sudan.
A DFS monitor appointed in 2012 to keep an eye on the bank discovered that it had not detected the allegedly high-risk transactions from Hong Kong and the UAE or reported them as it should have, the department said.
“If a bank fails to live up to its commitments, there should be consequences. That is particularly true in an area as serious as anti-money-laundering compliance, which is vital to helping prevent terrorism and vile human rights abuses,” said DFS head Benjamin Lawsky.
The department did not give any information on the nature of the transactions, or whether they proved to involve laundering or not.
In a settlement agreed with the bank, DFS ordered StanChart to halt dollar-clearing operations for unnamed “high-risk retail business clients” of its Hong Kong unit.
The bank is already cutting business with high-risk clients in UAE, but will also not be able to process dollar funds through the US for them. Its New York branch also is forbidden to take on any clearing or deposit accounts from new customers without the approval of Lawsky’s office.
The fine would have a negative impact on the bank’s reputation and international business, independent financial analyst Francis Lun told Agence France-Presse.
“It’s really an oversight on the part of Standard Chartered. They’d already paid a huge penalty still they installed a system that is useless . . . It will create tremendous problems with their international clients who cannot settle their accounts in US dollars. It will be a serious blow to [StanChart] group’s international business,” Lun said.