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.