New York: New York state's banking regulator yesterday hit Standard Chartered Bank with a $300 million fine and restrictions on its dollar-clearing business for failing to detect possible money-laundering.
The New York Department of Financial Services (DFS) said the British bank's internal compliance systems had failed to detect or act on a large number of 'potentially high-risk transactions' mostly originating from Hong Kong and the United Arab Emirates.
The new punishment came two years after the bank paid United States regulators $667 million to settle charges it violated US sanctions by handling thousands of money transactions involving Iran, Myanmar, Libya and Sudan.
Hong Kong transactions
A DFS monitor appointed in 2012 to keep an eye on the bank discovered that it had not detected the allegedly high-risk transactions from Hong Kong and the UAE or reported them as it should have, the department said.
"If a bank fails to live up to its commitments, there should be consequences. That is particularly true in an area as serious as anti-money-laundering compliance, which is vital to helping prevent terrorism and vile human rights abuses," said DFS head Benjamin Lawsky.
The department gave no information on the nature of the transactions, or whether or not they proved to involve laundering.
In a settlement agreed with the bank, DFS ordered Standard Chartered to halt dollar-clearing operations for unnamed 'high-risk retail business clients' of its Hong Kong unit. The bank is already cutting business with high-risk clients in the UAE, but will also not be able to process dollar funds through the United States for them.
Its New York branch also is forbidden to take on any clearing or deposit accounts from new customers without the approval of Lawsky's office.
Analysts said the sanctions would have a negative impact on the bank's reputation and international business, even though the fine was smaller than those imposed on other banks previously.
"It's really an oversight on the part of Standard Chartered. They'd already paid a huge penalty (in 2012) and still they installed a system that is useless," Hong Kong-based independent financial analyst Francis Lun said.
The action taken against Standard Chartered is part of an ongoing crackdown by New York state and federal authorities on banks.