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Harry Cassin
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StanChart pays $300 million for ‘second time around’ AML failures

The New York Department of Financial Services said Tuesday that Standard Chartered Bank will pay $300 million for “failures to remediate anti-money laundering compliance problems” required by the bank’s 2012 settlement with the same regulator.

Under Tuesday’s consent order, StanChart will suspend dollar clearing through its New York Branch for high-risk retail business clients from the bank’s Hong Kong subsidiary.

It will “exit high-risk client relationships within certain business lines at its branches in the United Arab Emirates.”

And it won’t accept new dollar-clearing clients or accounts anywhere without prior approval from Department of Financial Services.

DFS Superintendent Benjamin M. Lawsky said Tuesday: “If a bank fails to live up to its commitments, there should be consequences. That is particularly true in an area as serious as anti-money-laundering compliance, which is vital to helping prevent terrorism and vile human rights abuses.”

StanChart’s compliance remediation failures were uncovered by the DFS independent monitor installed at the bank as part of the 2012 order.

The monitor found that the StanChart had failed to detect “a large number of potentially high-risk transactions for further review.”

Many of the the potentially high-risk transactions that hadn’t been detected originated from StanChart’s Hong Kong subsidiary and branches in the United Arab Emirates, the DFS said.

After the 2012 settlement, StanChart created a rulebook to help it detect high-risk transactions. But the DFS monitor found numerous errors and other problems in the rulebook that led to the failures to flag the high-risk transactions either before or after they happened.

Under Tuesday’s order, StanChart has to make a new remediation plan with deadlines and benchmarks. It must appoint a “competent and responsible” executive reporting directly to the CEO to oversee the remediation, and engage the DFS monitor for two additional years.

StanChart will also put in place enhanced due diligence and know-your-customer requirements — “such as demanding greater information regarding the originators and beneficiaries of transactions” — for its dollar clearing operations.

The New York Department of Financial Services consent order dated August 19, 2014 with Standard Chartered Bank, New York Branch is here (pdf).


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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