UPDATE 4-Standard Chartered to pay $327 mln in US sanctions case

Mon Dec 10, 2012 4:45pm EST

* US Justice Dept, N.Y. DA's Office announce settlement
    * Comes in addition to $340 mln paid to N.Y. bank regulator
    * HSBC settlement of similar allegations expected soon


    By Aruna Viswanatha
    WASHINGTON, Dec 10 (Reuters) - Standard Chartered Plc
 agreed to pay $327 million to resolve allegations that
it violated U.S. sanctions against Iran, Sudan and two other
countries, capping months of legal headaches for the British
bank. 
    The U.S. Justice Department and the New York District
Attorney's office said on Monday the bank moved millions of
dollars through the U.S. banking system on behalf of customers
in the four sanctioned countries.
    The fine came on top of a separate payment of $340 million
made in August by Standard Chartered to New York's state banking
regulator over Iranian sanctions.
    Taken together, the two penalties could almost wipe out the
bank's profit growth this year. Nevertheless, its shares nudged
higher after Monday's announcement, which was in line with
payment provisions the bank disclosed last week. 
    Another British bank, HSBC Holdings Plc, is
expected as early as Tuesday to pay around $1.8 billion to
resolve U.S. money-laundering allegations, according to people
familiar with the planned announcement. The two settlements are
part of a growing crackdown of how banks process illicit
transactions for certain customers. 
    Standard Chartered said in a statement the settlement
followed nearly three years of "intensive cooperation with
regulators and prosecutors."
    The scandal erupted in early August, when New York banking
Superintendent Benjamin Lawsky said Standard Chartered was a
"rogue institution" that had shown contempt for banking
regulations, leaving the United States vulnerable to terrorists,
weapons dealers and corrupt regimes.
    At the time, Lawsky accused the bank of hiding certain
information on $250 billion worth of transactions involving Iran
and threatened to revoke its state banking license.
    In its statement on Monday, Standard Chartered said that the
U.S. Treasury Department found only about $24 million of
transactions on behalf of Iranian parties and $109 million on
behalf of parties in Burma, Sudan and Libya appeared to violate
U.S. sanctions laws.
    
    TWO PENALTIES
    Asked about the two separate penalties on Standard
Chartered, one by Lawsky and another by the Justice Department
and other agencies, a top official said the Justice Department
probe was based on federal law.
    "We really did look at it from the violation of federal
law," Lanny Breuer, the chief of the Justice Department's
criminal division, said in an interview. "We recognize that we
have state partners and other partners out there who have to
look at these violations from a different prism."
    Standard Chartered's shares crashed 30 percent immediately
after Lawsky's action in August, wiping some $17 billion off its
market value. Since then, they have clawed back most of that
fall, but are still 4 percent below their level before the news.
    "Hopefully this now draws a line under the issue," said Gary
Greenwood, analyst at Shore Capital in Britain. "There's been no
obvious damage to the franchise as a result of this."
    The agreements announced on Monday described how employees
at Standard Chartered raised concerns about the transactions,
only to be ignored by the bank.
    One such instance came in 2003, regarding Iranian
transactions that moved through the bank's Dubai office. "We may
not be exactly breaking the law," the employee wrote, "but we
may be breaking the spirit of the law and may possibly get our
NY branch into hot water."
    The Justice Department and the New York District Attorney
both agreed to defer charges against the bank, and drop the
charges if the bank improves its sanctions compliance and
forfeits $227 million.
    Standard Chartered entered into a separate $100 million
agreement with the U.S. Federal Reserve to resolve allegations
that the bank provided "inadequate and incomplete responses" to
bank examiners and provided insufficient oversight of its
sanctions compliance program.
    Adam Kaufmann, the chief of investigations for the New York
District Attorney's office, said the $227 million forfeiture was
based on Standard Chartered's conduct and did not take into
account the $340 million the bank already paid to Lawsky's
agency.
    "The criminal settlement is $227 million and that's because
that's how this bank's conduct compared to other banks'
conduct," Kaufmann said. 
    In similar settlements over sanctions violations, Lloyds TSB
Bank Plc has forfeited $350 million, Credit Suisse AG
 $536 million, Barclays $298 million and ING
Bank NV $619 million.
    "These cases give teeth to sanctions enforcement, send a
strong message about the need for transparency in international
banking, and ultimately contribute to the fight against money
laundering and terror financing," New York District Attorney
Cyrus Vance said.
    The U.S. Treasury Department also entered into a settlement
to resolve allegations that the bank's London and Dubai offices
violated U.S. sanctions against the four countries at issue.
    The Treasury Department said it levied a $132 million
penalty but deemed that to have been satisfied by the bank's
payment to the Justice Department.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article