NY’s Department of Financial Services (which regulates NY branches of non-US banks) has stated StanChart conducted $250bn of transactions with Iranian banks over
seven years in violation of federal money laundering laws. It states that the bank ‘repaired’ wire-transfer orders involving its NY branch, to remove any reference to the involvement of Iranian banks. StanChart must appear on 15th August to explain these apparent violations and demonstrate why the banking license to operate in the state of New York should not be revoked. Its shares fell 7.4% in Asian trading hours.
The bank issued a statement overnight that 99.9% of its transactions with Iran complied with US Treasury regulations and that the total value of transactiosn that weren’t in compliance was less than $14mn. StanChart ‘strongly rejects the position and portrayal of facts’ made by the state regulator. According to the filing, the same regulator is investigating similar transactions with other US-sanctioned countried, including Libya, Myanmar and Sudan. Aside from the obvious reputational concerns in all this newsflow, questions can be raised about the size of fine, clearing in future if the license is lost and the related investigations mentioned – far less so about direct impact on ongoing profitability (still over 90% of profit is generated in Asia).