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Just under two years since it was dubbed a “rogue institution” by Benjamin Lawsky, the superintendent of New York State’s Department of Financial Services, London-listed bank Standard Chartered revealed that it was in discussions with that same regulator, facing further fines and remedial action.
“Certain issues have been identified with respect to the Group’s post-transaction surveillance system, which is part of its anti-money laundering systems and controls,” the bank said as it released its results for the first half of 2014, adding that it was “in discussions” with the regulator and the independent monitor put in place as part of the regulator’s previous settlement with the bank in 2012.
Earlier this week, The New York Times reported that Lawsky was considering enforcement action against the bank, after the independent monitor identified millions of transactions that should have been noted for review.
The bank said that the enforcement action could lead to further fines, and an extension of the independent monitor’s term.
In August 2012, Standard Chartered agreed to pay Lawsky’s office $340 million for handling $250 billion in Iranian transactions in contravention of US rules. A number of other banks also faced action, including BNP Paribas, which in June agreed to pay a record $8.9 billion to US regulators for violating sanction controls.
“It’s a sign of the regulatory climate change that is taking place,” says Ross Delston, an attorney and anti-money laundering specialist based in the US. “The penalties are more severe than before but also regulators such as Mr Lawsky are actually monitoring the monitoring…”
The admission by Standard Chartered came as it announced a five per cent fall in operating profits, which the bank attributed to negative sentiment towards emerging markets and ongoing problems in Korea. “Our performance this half is clearly disappointing,” said CEO Peter Sands in a statement. While full year underlying profits are expected to fall, those for the second half of the year are expected to show a year-on-year improvement.
Standard Chartered shares fell 1.4 per cent in afternoon trading. They have fallen 18 per cent in the past twelve months.
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