UPDATE 3-StanChart told to say sorry over US sanctions comments
* Manhattan, federal prosecutors demanded statement
* StanChart violated deferred prosecution deal-prosecutors
* StanChart chairman "very much" regrets March 5 comments
* Comments were about breaches of U.S. sanctions on Iran
LONDON/WASHINGTON, March 21 (Reuters) - Standard Chartered bowed to pressure from U.S. authorities and apologized on Thursday for comments by the bank's chairman denying the bank had intentionally breached U.S. sanctions on Iran.
The highly unusual retraction and apology was forced on the bank by the U.S. Justice Department and the Manhattan District Attorney's Office, those agencies said.
In a $667 million settlement of charges it violated U.S. sanctions against Iran, Sudan, and other countries, London-based Standard Chartered last year agreed to deferred prosecution agreements with the New York and federal prosecutors.
Standard Chartered Chairman John Peace said on March 5 at a press conference with reporters that the bank "had no willful act to avoid sanctions."
In Thursday's statement he said those comments were "both legally and factually incorrect" and he retracted them.
Peace "blatantly contradicted the bank's acceptance of responsibility for its crimes," Michael Passman, spokesman for the Justice Department's criminal division, said in a statement.
"Under the terms of our agreement, Standard Chartered was required to retract the statement or be subject to prosecution," Passman said.
The department and the Manhattan District Attorney's office told the bank about the discrepancy, which led to the retraction, Passman said.
"As part of these agreements, we rigorously monitor the banks for continued compliance," said Joan Vollero, deputy director of communications for the Manhattan District Attorney.
"Under the terms of our agreement, we demanded a public repudiation and they complied," she said.
In the Thursday statement, Pearce said his earlier comments contradicted the bank's acceptance of responsibility.
"To be clear, Standard Chartered Bank unequivocally acknowledges and accepts responsibility ... for past knowing and willful criminal conduct in violating U.S. economic sanctions laws and regulations," Peace said.
He said he "very much" regretted his earlier comments, which "were at best inaccurate".
The bank said the statement followed discussions with the two U.S. agencies, but declined further comment.
The settlements by Standard Chartered related to transactions for customers in sanctioned countries Iran, Sudan, Libya and Burma between 2001 and 2007.
U.S. authorities accused the bank of leaving out information from U.S. dollar wire payments, preventing regulators from identifying suspicious activity.
Before Standard Chartered settled the case with criminal authorities in December, New York banking regulator Benjamin Lawsky moved forward separately and threatened to revoke the bank's license over the conduct.
The move angered UK politicians and regulators, and other U.S. regulators who had spent more than two years investigating the bank and wanted a more coordinated settlement before Lawsky made public his accusations in August.
The demand by U.S. authorities for Standard Chartered to issue a public apology is further evidence of the tough stance they are taking, and is a warning shot to other banks.
The Justice Department often bars companies it settles with from publicly contradicting the allegations at issue, but such provisions are not often invoked in public retractions.
New York and federal prosecutors have reached six deferred prosecution agreements with European banks for violating U.S. sanctions over the past four years, including with HSBC , ING, Barclays, Credit Suisse and Lloyds.
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