Standard Chartered case casts a chill over banks
Benjamin M Lawsky, who leads the New York Department of Financial Services, upended the regulatory landscape on Monday by accusing Standard Chartered of scheming with the Iranian government for nearly a decade and hiding from regulators $250 billion in transactions through its New York branch. The bank, for its part, has said it “strongly rejects the position and portrayal of facts” by Lawsky’s department.
The accusations largely centre on transactions that the federal government permitted until 2008, namely the transfer of money with Iran through the United States from one foreign-based entity to another.
Until Lawsky’s case against Standard Chartered claimed that the bank cloaked these so-called U-turn transactions, there was virtual consensus among Treasury Department authorities, the Justice Department and the Manhattan district attorney’s office that such transactions were legal, even if they violated the spirit of the law, according to people briefed on the matter.
A number of European banks, including Lloyds, Barclays and ING, that have already settled money laundering cases with the US Justice Department and the district attorney’s office are concerned that they could be in the state banking regulator’s sights, according to federal authorities who spoke on the condition of anonymity.
Details in each bank’s case were different,
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