* Between 1,400 and 8,000 accounts affected in the UAE
* Threat a further complication for CEO Sands
* Bank agreed to pay $300 million fine on Tuesday
* Bank says will work with regulators
(Adds Standard Chartered response, shares, background)
By Stanley Carvalho and Matt Scuffham
ABU DHABI/LONDON, Aug 21 Banking group Standard
Chartered Plc is liable to legal action in the United
Arab Emirates after it agreed to close some customers' UAE
accounts in an anti-money laundering settlement with U.S.
regulators, the UAE central bank said on Thursday.
Under the settlement, announced on Tuesday, the bank agreed
to pay a $300 million fine, end high-risk relationships with
small- and medium-sized business clients in the UAE, and suspend
the processing of dollar-denominated payments for some clients
at its Hong Kong unit.
The threat of further legal action in the UAE is a further
complication for StanChart Chief Executive Peter Sands, who is
fighting to retain the backing of investors after a series of
transgressions and a decline in the bank's earnings.
"We have noted the announcement made by the UAE Central
Bank. We always work with our regulators to achieve the right
outcomes," the lender said in an e-mailed statement.
Shares in the bank were down 1 percent by 1415 GMT.
In the UAE, between 1,400 and 8,000 Standard Chartered
accounts are expected to be affected, the central bank said,
adding that it would examine every account to identify any
The British-based bank will be liable to legal action by the
account owners "because of the material and moral damage which
is falling on them", the central bank said.
It added that its Consumer Protection Unit was willing to
consider complaints from affected account holders. However it
did not say if it believed any action was likely by account
The central bank said that while Standard Chartered had not
fulfilled U.S. regulatory requirements, its UAE branches had
committed "no significant violations" of international money
laundering rules, such as the standards of the Financial Action
Task Force, an inter-governmental body.
Standard Chartered said on Tuesday, after the settlement was
announced, that it was in any case seeking to leave the business
of serving small- and medium-sized clients in the UAE as part of
a broad effort to sharpen its strategic focus.
"The UAE remains one of Standard Chartered's leading
franchises globally and the move does not reflect a decreased
focus on the country," it said in a statement.
The UAE, including Dubai, is the top financial hub in the
Middle East and like other banking centres, has been under
pressure from Washington to crack down on money-laundering as
well as sanctions-busting by Iranian businesses.
In 2011 Dubai-based Noor Islamic Bank, since re-named Noor
Bank, halted a business in which it channelled billions of
dollars from Iranian oil sales through its accounts, as
Washington stepped up sanctions over Iran's disputed nuclear
In May last year, the UAE revoked the licences of two local
money exchange companies for non-compliance with regulations
including rules against money laundering.
(Writing by Andrew Torchia; Editing by Jason Neely and David