British banking giant Standard Chartered allegedly helped Iran avoid sanctions by concealing $250 billion worth of transactions over nearly ten years, according to banking regulators in New York.
The New York State Department of Financial Services accused the London-based banking group Monday with concealing 60,000 transactions with Iranian clients, including the Central Bank of Iran, from 2001 to 2010.
Standard Chartered shares listed on the London Stock Exchange ended the day higher as the news from New York broke after the markets were closed in Europe. But thinly traded shares of Standard Chartered (SCBFF) listed on U.S. over-the-counter exchanges fell more than 10% on high volume.
The United States and its allies have increased economic sanctions against Iran during the past few years in an effort to deter the Islamic Republic from developing its nuclear capabilities. Iran has argued that its goal is to produce energy, but U.S. officials say the Iranians are developing weapons.
Standard Chartered allegedly falsified business and official records to mask transactions with Iranian customers that were subject to U.S. economic sanctions, the New York State Department of Financial Services said. In exchange, the global banking group reaped “hundreds of millions” of dollars in fees, according to an order issued by the New York authorities.
“Led by its most senior management, [Standard Chartered] designed and implemented an elaborate scheme by which to use its New York branch as a front for prohibited dealings with Iran – dealings that indisputably helped sustain a global threat to peace and stability,” the regulators said in the document.
The regulator has ordered Standard Chartered executives to appear in New York on August 15 to answer the charges. Standard Chartered could face fines and potentially have its U.S. banking license revoked.
Standard Chartered said in a statement that it has been conducting an internal review of its compliance with U.S. sanctions and is in discussions with U.S. regulators. “The group cannot predict when this review and these discussions will be completed or what the outcome will be,” Standard Chartered said.
In its order, the New York regulator said Standard Chartered operated as “a rogue institution” by clearing illicit transactions for Iranian clients and intentionally withholding information from state and federal regulators.
According to the order, an official in the bank’s U.S. division warned top bank managers in London in 2006 that the bank could face “serious criminal liability,” according to internal emails cited in the order.
But the warning was allegedly rejected by the recipient, who responded by writing in an email: “You f—ing Americans. Who are you to tell us, the rest of the world, that we are not going to deal with Iranians.”