Standard Chartered To Face Fines Over Iran Sanctions?

The collision of geopolitics and banking continues in headlines tied to sanctions, the SWIFT payment system, SWIFT’s connection to Iranian banks and controversies continuing over state sponsorship of terrorism.

Financial Times reported earlier in the week that U.S. prosecutors have informed one bank, Standard Chartered, that criminal charges loom against former employees of the London-based bank, as those executives allegedly breached sanctions involving companies linked to Iran. The financial publication cites as sources “people briefed on the matter.”

Writ large, the U.S. charges would signal what FT termed “a hardening of the approach” the country is taking as it eyes breaches of those sanctions, as the Trump administration has left an international nuclear agreement with Iran. In the wake of that withdrawal, the U.S. has levied economic sanctions against Iran, which take effect next month.

The investigation into the London bank has come amid allegations that the bank, colloquially known as StanChart, has been processing transactions in U.S. dollars for entities tied to Iran. That activity continued even as StanChart paid a $667 million fine in 2012 based on similar action, while at the same time sidestepping criminal charges.

The findings come from a slew of U.S. law enforcement departments, including the Department of Justice, and in New York, the Manhattan District Attorney and the New York Department of Financial Services, according to the report.

As to the extent of financial impact, The National reported Monday (Oct. 8) that StanChart could see penalties as high as $1.5 billion for allowing its customers to violate those sanctions.

The bank has said that it is cooperating with the investigation, and had warned in July that there could be a settlement in the offing. Beyond that, other banks that have settled with authorities include BNP Paribas, which paid $8.9 billion in fines in 2014.  That bank pleaded guilty to criminal charges, and had some clearing rights pertaining to U.S. dollar transactions temporarily suspended.

The Standard Chartered investigation comes amid a larger tug of war between Europe and the United States, where, by and large, officials from the Continent have exhorted the Trump administration not to cut off Iran’s ability to access SWIFT, which is of course a global messaging platform. Such urgings have come from Germany, France and the United Kingdom.

In an interview with FT, reported separately, an unnamed diplomat stated that other approaches to Iran and financial access may be warranted. “Our ask is: Why bother ripping out all of the electrical cables from a building if you can switch off a light? If you can designate a bank [for sanctions], then there’s no need to force SWIFT to disconnect from Iran.”

At issue, too, is the state of SWIFT itself, which connects more than 11,000 banks internationally. As reported several weeks ago, Germany Foreign Minister Heiko Maas urged the European Union to set up its own international payments network.

That initiative was born of the U.S. requirement that the Iranian banks be cut off from the SWIFT network next month as part of the sanctions against those banks. The measure had been suspended when the nuclear deal became official two years ago and now is back on the table.


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Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.