Market Commentary and Intraday News

UK bank accused of Iran money laundering scheme

290 days ago

By MICHAEL GORMLEY
Associated Press

(AP:ALBANY, N.Y.) A British bank schemed with the Iranian government to launder $250 billion from 2001 to 2007, leaving the United States' financial system "vulnerable to terrorists," New York's financial regulator charged Monday.

State Financial Services Superintendent Benjamin Lawsky signed an order that requires London-based Standard Chartered Bank to answer his questions following an investigation into "wire stripping," which is the process of removing crucial identifiers in financial transactions.

The bank conspired with its Iranian clients to route nearly 60,000 different U.S. dollar payments through Standard Chartered's New York branch "after first stripping information from wire transfer messages used to identify sanctioned countries, individuals and entities," according to agency's order.

The order claims the transactions provided the bank with millions of dollars in fees at a time when such trade was restricted.

The agency called the bank a rogue institution, and said its actions "left the U.S. 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."

The order also identifies an October 2006 "panicked message" from a London group executive director who worried the transactions could lead to "very serious or even catastrophic reputational damage to the group."

A request for comment from the bank wasn't immediately returned Monday.

If proven, the scheme would violate state money-laundering laws. The order also accuses the bank of falsifying business records, obstructing governmental administration, failing to report misconduct to the state quickly, evading federal sanctions and other illegal acts.

Between 2004 and 2007, about half of the period covered by the order, the department claims Standard Chartered hid from and lied about its Iranian transactions to the Federal Reserve Bank of New York. Before 2008, banks were allowed to transact some business with Iran, but only with full reporting and disclosure, the order states.

In 2008, the U.S. Treasury Department stopped those transactions because it suspected they helped pay for Iran to develop nuclear weapons and finance terrorist groups including Hamas and Hezbollah. The order states the bank has to provide information and answer to its questions to determine if any of its funding aided the groups or Iran's nuclear program.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

View all of today's news »