Money & Banking

Iran deals: StanChart considering legal action against US regulator

Vidya Ram London | Updated on March 12, 2018 Published on August 09, 2012

Contends that less than 0.1% of the total transactions with Iran fell foul of the framework

Standard Chartered’s fight back against the allegations leveled against it by New York state authorities has continued, with reports that the bank is considering legal action against the regulator.

The bank has consulted its legal advisers about the possibility of such action, the Financial Times said on Thursday, quoting two unnamed sources. The bank itself has declined to comment on the reports.

Standard Chartered’s shares have been recovering slightly over the past two days but are still sharply lower than before the New York state Department of Financial Services’ order, describing the bank as a “rogue” institution, and accusing it of scheming to hide up to $250 billion worth of transactions with Iran.

The scale of the charges – appearing to far outstrip the size of transactions that other banks had been penalized for US Office of Foreign Asset violations, and the potential risks for Standard Chartered (the DFS raised the issue of Standard Chartered’s New York license, and its dollar clearing operation) spooked investors. However, the bank quickly responded with a strongly worded denial of the DFS’ position, challenging its portrayal of the facts. It contends that just $14 million (Rs 77.1 crore) did not follow the regulator’s U-Turn framework, less than 0.1 percent of the total transactions relating to Iran.

Since then questions about the strategy and motivation of DFS and its head Benjamin Lawsky have surfaced, with Reuters reporting that federal agencies were “blindsided and angered” by the attack on the bank, which has been under investigation by a number of regulators.

In Britain too the charges have provoked anger: some politicians have whether there was a bias against British institutions in the regulation of the banking sector in the U.S.

Even the Governor of the Bank of England Mervyn King raised his concerns, calling for regulatory bodies investigating a case to “work together” and steer clear of too many public statements until the investigation was completed.

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Published on August 09, 2012
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