Markazi Bank transactions figure in US regulator’s note

Vidya Ram Updated - March 09, 2018 at 12:24 PM.

One of the transactions highlighted by the New York State’s Department of Financial Services involved the Central Bank of Iran, Markazi Bank 2001.

The following is based on the DFS’s version of events in its order published on August 6.

Ahead of the settlement reached on Tuesday evening, Standard Chartered had strongly contested the DFS’s portrayal of the facts, and insisted just 0.1 per cent of the transactions it conducted with Iran breached the US’s stringent Office of Foreign Asset Control rules.

At that time the US sanction regime against Iran still allowed “U-turn payments” to take place – that allowed banks to process transactions involving Iran so long as it didn’t begin or end in Iran itself, and so long as disclosure requirements were met.

Two, SWIFT payment messages were often used by banks as part of this disclosure: MT-103, which identified all parties involved including the remitter, correspondent banks, and the final beneficiary. The second, MT-202s were less detailed as they were for bank-to-bank credit transfers.

In early 2001, Markazi approached Standard Chartered to receive $500 million in daily US dollar proceeds from the National Iranian Oil Company’s daily oil sales.

The regulator maintains that as Markazi was a bank sanctioned by US authorities, its identity should have been disclosed by Standard Chartered, and that the New York bank should have been given “foreknowledge” of the U-turn payments to “assure itself that it is making permissible payments.”

The DFS says Standard Chartered told Markazi to send in the MT-202 SWIFT payment messages with an identifier code from Standard Chartered London, so as not to appear as though it came from an Iranian bank, when going through New York.

In addition, it added “false and misleading entries” into a SWIFT “field 52” on a MT103 or an MT202, which would have identified the Iranian entity.

Published on August 15, 2012 16:28