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People walk outside the Standard Chartered Bank headquarters in Hong Kong on February 26, 2019. -Standard Chartered's fortunes climbed in 2018 to $3.9 billion in pre-tax profits the bank said, after previously warning it had set aside nearly a billion dollars for regulatory fines in the United States and Britain.
Standard Chartered will pay around $1.1bn (£842m) to settle long-running US and UK regulatory probes into its failure to comply with international sanctions and lax anti-money laundering controls.
The emerging markets-focused bank STAN, +0.28% 2888, +1.37% said on April 9 it will pay $947m to US agencies to end their investigation into its breach of US sanctions against Iran and a further £102.2m to the UK Financial Conduct Authority.
Standard Chartered booked a $900m provision to cover these settlements in the final three months of 2018 and will take an additional $190m hit in its upcoming first-quarter results.
Bill Winters, chief executive of Standard Chartered, said: “We are pleased to have resolved these matters and to put these historical issues behind us. The circumstances that led to today’s resolutions are completely unacceptable and not representative of the Standard Chartered I am proud to lead today.
“Fighting financial crime is central to what we do and who we are; we do not tolerate misconduct or lax controls and we will continue to root out any issues that threaten the trust we have built over more than 160 years.”
In the US, Standard Chartered had been under investigation by the Department of Justice, Office of the District Attorney for New York County, New York State Department of Financial Services, Board of Governors of the Federal Reserve System and the US Treasury’s Office of Foreign Assets Control.
The agencies were concerned about hundreds of millions of dollars of financial transactions cleared through the bank’s offices in the UK and the Gulf.
The FCA said its fine was the second largest of its kind and was linked to investigations into Standard Chartered’s UK wholesale bank and branches in the United Arab Emirates.
In a statement on April 9, the regulator said it had found “serious and sustained shortcomings” in the bank’s controls relating to due diligence and monitoring of customer accounts. It added that the bank had failed to ensure that its branches in the UAE had the correct counter-terrorist controls in place.
In one instance, the FCA said, Standard Chartered had opened an account with 3 million UAE dirham (£500,000) in cash in a suitcase without providing sufficient evidence that the origin of the money had been investigated.
The FCA also said the bank had failed to collect enough evidence on a customer “exporting a commercial product which could, potentially, have a military application” and had not properly reviewed another whose transactions had raised “repeated red flags”.
Mark Steward, director of enforcement and market oversight at the FCA, said: “Standard Chartered’s oversight of its financial crime controls was narrow, slow and reactive.
“These breaches are especially serious because they occurred against a backdrop of heightened awareness within the broader, global community, as well as within the bank, and after receiving specific attention from the FCA, US agencies and other global bodies about these risks.”
Steward added that the bank was working hard to improve its anti-money laundering controls.
This story originally appeared on Financial News
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