by Kevin McCauley
Britain’s Standard Chartered, which last week basically told New York financial regulator newbie Benjamin Lawsky to buzz off, today agreed to pay $340M to settle charges lodged by the Empire State’s Dept. of Financial Services that it laundered hundreds of billions of dollars.
StanChar had cavalierly dismissed Lawsky’s claim that the bank schemed with Iran’s government to launder $250B from `01 to `07. It implied that Lawksy was off his rocker, saying that after a rigorous internal review it found that 99.9 percent of the bank’s transactions were legit. A mere pittance, $14M, may have been a tad shady, conceded the 150-year-old bank, which offered to tidy up loose ends with the Yanks. In short, StanChar rejected the New York’s Dept. of Financial Services’ charges, believing they “do not present a full and accurate portrayal of the facts.”
The bank’s allies echoed that position. The Economist reported that British swells sensed an anti-London bias, charging that New York was trying to gain an advantage over The City. The magazine detected some “reports of disquiet among other American agencies about the DFS’s aggressive stance. The DFS is newly created: some suspect it of grandstanding.”
StanChar is singing a new tune today. “The parties have agreed that the conduct at issue involved transactions of at least $250B,” according to Lawksy’s statement. Ouch! The bank has agreed to install monitors for at least two years who will report directly to DFS and permanently staff personnel in its New York bank to oversee and audit any offshore money-laundering due diligence and monitoring undertaken by the bank.
On the PR front, it’s only a matter of time before StanChar spins the settlement as an opportunity to avoid a protracted fight with the NYS regulators.
Lawsky and his staff did an outstanding job at an institution that is only nine months old. They should share some of their bulldog bravado with regulators at the Treasury Dept., Federal Reserve and Justice Dept. who are way too cozy with banking giants.
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