UK Bank Standard Chartered’s $250 Billion ‘Frankenstein Monster’
Stephen: Yet another truth comes to light (literally) within the banking and finance sector.
What still confounds me is that these same cabal-owned money-making organisations (interesting logo symbol, I must say!) are out there doing business with a country they all say is ‘not to be trusted’… when it seems it’s the other way round.
I have included links to two other relevant and current stories here; one a BBC News piece which is a good backgrounder and explains the issue.
Standard Chartered: UK Bank Faces ‘Frankenstein Monster’ in US Over Money Laundering Allegations
The allegations against Standard Chartered suggest British banks have badly misread how the politics around anti-money laundering have changed in the US.
By Richard Blackden, US Business Editor, New York, The Telegraph UK – August 7, 2012
http://tinyurl.com/9n7qowo
“We believe the (Iranian business) needs urgent reviewing at the group level to evaluate if its returns and strategic benefits are…. still commensurate with the potential to cause very serious or even catastrophic reputational damage to the group.”
This email sent in October 2006 from the head of Standard Chartered in the Americas to an executive director back in London was one of a handful quoted by a New York regulator as it accused the British bank of illegally laundering $250bn (160bn pounds) of money for Iranian banks for almost a decade.
For those who work in the anti-money laundering (AML) business in the US, the note of panic from the executive in New York is telling.
Like HSBC a month ago, Standard Chartered is alleged to have put the pursuit of profit ahead of complying with America’s AML laws.
Whether the allegations are proved or not against Standard Chartered, the two episodes suggest that British banks at the very least have badly underestimated how efforts to combat money laundering raced up the agenda of politicians and regulators after the September 11 terrorist attacks.
No longer a matter of consumer compliance or even just a weapon against drug dealers, AML was a new front in the battle against terrorists and funders of terrorism who wanted to move dollars through America’s financial system.
“The biggest difference between US banks and foreign banks is that the US banks have a greater understanding of how important these issues are to regulators,” says Ross Delton, a former regulator who now advises companies on AML.
“It was not just about ramping up after September 11, it was a whole new landscape. The US takes this stuff very, very seriously.”
Just over a month after the Twin Towers were struck, Congress passed the Patriot Act which toughened the requirements on banks and other financial institutions to ensure they were not laundering money. Alongside that legislation, the Office of Foreign Asset Controls (OFAC), a division of the US Treasury that administers the economic sanctions America has against a number of countries including Iran.
The legal battle that Standard Chartered now faces will pivot over allegations that for six years the bank abused an exemption under OFAC that allowed wire transfers involving an Iranian entity as long as the money was being sent from a non-Iranian bank to a non-Iranian bank. Standard Chartered on Tuesday insisted that its transactions were 99.9pc compliant with the exemption and that it will contest the allegations.
However that legal battle unfolds for Standard Chartered, politically the 2006 email from the unnamed head of the Americas is looking more and more prescient. With the US presidential election looming, the threat posed by Iran is central to the debate as President Barack Obama and Republican challenger Mitt Romney vye to display their credentials on national security.
“A bank serving as a money launderer for Iran, you couldn’t make up a Frankenstein monster designed to scare the US public more,” says John Coffee, a professor of securities law at Columbia University in New York.
Amid the political storm in the US, banking analysts in the City of London spent Tuesday trying to work out what losing its licence to operate in New York would mean for Standard Chartered.
Most concluded it would be a major blow to its ability to help customers both in the US and Asia, who rely on its ability to hold cash in the US and move money through the US financial system.
What is clearer, is that the next few weeks will be the toughest the British bank has faced in the US since opening an office there in 1902.
So what are the accusations and why is Standard Chartered said to have broken the law?
Q and A: Standard and Chartered
By BBC News – August 7, 2012
http://www.bbc.co.uk/news/business-19157426
Standard and Chartered Shares Dive:
By Louise Armitstead, and Helia Ebrahimi, The Telegraph – August 7, 2012
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9460350/Shares-dive-as-Standard-Chartered-reels.html