A British bank hid tens of thousands of transactions over a decade, New York's bank regulatory agency charged.
Thwarting controls against money laundering, Britain's Standard Chartered Bank enabled Iranian banks and corporations to hide roughly 60,000 transactions worth at least $250 billion within the bank, New York state's banking regulator charged Monday.
The New York State Department of Financial Services accused the British bank, which it called a "rogue institution," of hiding the transactions to gain hundreds of millions of dollars in fees from January 2001 through 2010.
Under U.S. law, transactions with Iranian banks are strictly monitored and subject to sanctions because of government concerns about the use of the U.S. banks to finance Iran's nuclear programs and terrorist organizations.
The highest levels of management knew that Standard Chartered was deliberately falsifying records to allow billions of dollars in transactions to flood through the bank, according to the regulatory filing.
The bank "left the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes," the agency said in an order sent to the bank Monday. At the most extreme, the agency's enforcement actions against the bank could include the revocation of its license to operate in New York.
Similar schemes elsewhere
Beyond the dealings with Iran, the department said it discovered evidence that Standard Chartered operated "similar schemes" to do business with other countries under U.S. sanctions, including Myanmar, Libya and Sudan.
During a nine-month investigation, the department, led by Benjamin Lawsky, said it reviewed more than 30,000 bank documents, including internal e-mails. It investigated the bank because it had routed the transactions through its New York operations. Under the order, Standard Chartered will have to pay for an independent monitor to ensure its operations comply with state law.
In an e-mailed statement, a spokesman for Standard Chartered said the bank was reviewing its "historical U.S. sanctions compliance and is discussing that review with U.S. enforcement agencies and regulators." He added that the bank "cannot predict when this review and these discussions will be completed or what the outcome will be."
Big Iranian banks implicated
The department contends that Standard Chartered systematically scrubbed any identifying information from the transactions for powerful Iranian institutions, including the Central Bank of Iran and Bank Saderat, that are legally subject to sanctions under U.S. law.
The department accused the bank of undermining the safety of New York's financial system through a range of violations including "falsifying business records" and "obstructing governmental administration," according to the order.
Suspecting that Iranian banks were using their financial institutions to finance its nuclear weapons program, the U.S. Treasury Department banned certain transactions between Iranian banks and U.S. financial institutions in 2008.
The regulator said the bank engaged in so-called U-turn transactions, where a foreign institution routes money to a U.S. bank, which then transfers the money immediately to a separate foreign institution.