Banking regulators are usually cautious about what they say regarding the financial institutions that they regulate. But Benjamin Lawsky - Superintendent of Financial Services in New York State and former chief of staff to New York's governor, Andrew Cuomo - has thrown caution to the wind. He has accused Standard Chartered of having "schemed with the government of Iran" to avoid US sanctions - by, allegedly, hiding 60,000 transactions, involving $250bn (£160bn), and reaping the bank "millions of dollars in fees".
Mr Lawsky alleges that Standard has "left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity". Unsurprisingly, Standard Chartered dismisses accusations of such industrial-scale wrongdoing. "As we have disclosed to the authorities, well over 99.9 per cent of the transactions relating to Iran complied with U-turn regulations [permitted Iranian transactions]. The total value of transactions that did not follow the U-turn was under $14m."
But trumped-up or not, Standard - which had avoided the various scandals that have engulfed the banking sector so far - should be worried. The bank could even lose its New York banking licence - disastrous given the importance of a US presence for a bank that's a global trade finance bank. Although analysts think that's unlikely. "STAN [Standard Chartered] is more likely to incur a fine and should be able to fulfil the conditions necessary to avoid the potentially more serious threat of losing its New York banking licence," say analysts at Canaccord Genuity. A fine could be painful, though - HSBC, for example, set aside $700m to cover money laundering-related systems lapses last month.
