U.S. extends scrutiny of Standard Chartered on sanctions compliance

December 9
6:21 PM 2014

Standard Chartered (STAN.L) will face another three years of scrutiny for compliance with U.S. standards related to sanctions against certain countries, according to documents filed on Tuesday that also noted another probe of the bank is underway.

The original agreements, struck with the U.S. Justice Department and the Manhattan district attorney over the bank's violations related to U.S. sanctions on Iran and other countries, was due to expire on Wednesday.

The agreement to extend by three years deferred prosecution agreements with Standard Chartered means that the bank will face enhanced oversight for a longer period of time and could be hit with harsher penalties.

At any point in the next three years, the agreement could be pulled back and criminal charges against the bank could be filed, according to Joan Vollero, a spokeswoman for the Manhattan district attorney.

In a statement, the bank said it agreed to the extension and would work with authorities to reach the standard required.

The U.S. amendment said the bank had taken steps to improve its compliance program and had hired new leadership and staff in its legal and financial crime compliance offices.

The Justice Department said it sought the extension in part because it had obtained information about "possible historical violations" of U.S. sanctions laws that took place after 2007. It said it had analyzed 3.7 million pages of documents and hundreds of recorded phone calls as part of the probe.

"The government requires additional time to determine whether violations did in fact occur, and if so, whether those violations were committed willfully and what the result should be," it said in the agreement.

Reuters reported in October that authorities were investigating potential violations connected to Standard Chartered's banking for Iran-controlled entities in Dubai.

According to the amendments, the bank has agreed to retain an independent compliance monitor overseen by both U.S. and Manhattan prosecutors.

The bank said it is cooperating with the latest investigation.

Standard Chartered paid U.S. authorities $667 million in 2012 over the violations stemming from its handling of transactions involving Iran and other sanctioned countries.

The 2012 settlements also included an agreement with New York's banking regulator, the state Department of Financial Services. In August of this year, the regulator fined Standard Chartered another $300 million after a monitor it appointed in 2012 uncovered shortcomings in the bank's computers that caused potentially high-risk transactions to go undetected, according to a consent order.

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