StanChart may face another fine for sanction breaches

NEW YORK: Standard Chartered Plc has already paid a painful penalty for secretly moving billions of dollars through the US on behalf of Iranian clients, in violation of sanctions. But a sweeping investigation has found evidence suggesting that the bank’s Iranian business was more extensive than it admitted, according to five people familiar with the matter.

Now US authorities are weighing a criminal penalty against Standard Chartered and individual employees, the people said, who requested anonymity to speak about the probe.

A coalition of enforcement and regulatory agencies, including the Justice Department, New York’s Department of Financial Services and the Manhattan District Attorney, have finished their investigation and may announce the resolution by the end of the year, the people said.

Authorities may impose an even bigger fine than the US$667mil the bank paid in 2012 to penalise it for what they view as concealment, though specific numbers had not yet been discussed in negotiations as of early August, according to the people, who declined to comment on private talks.

In securities filings, the bank has said it could face a range of civil and criminal penalties stemming from the case, “including substantial monetary penalties.” Standard Chartered hasn’t set aside specific reserves for this matter.

“We continue to fully cooperate with the investigation regarding our historical sanctions compliance and are engaged in ongoing discussions with the US authorities,” Julie Gibson, a spokeswoman for Standard Chartered, said in a prepared statement.

“While we do not comment on the substance of those discussions, we look forward to the resolution of this matter.”

In its annual report, the bank said the US probe is “examining the extent to which conduct and control failures permitted clients with Iranian interests to conduct transactions through Standard Chartered Bank.”

How the case is resolved may reveal much about the US’s approach to enforcement on issues of key concern under President Donald Trump.

He has reasserted a hard line on Iran, which the administration views as a state sponsor of terrorism and a source of regional instability, scuttling the nuclear agreement struck by the Obama administration and re-imposing the sanctions regime that had been in place before.

But at the same time, the Justice Department has promoted smaller penalties for corporate misconduct, while prioritising the prosecu- tion of individuals.

The Obama administration’s sanctions enforcement policy was characterised by big fines but rarely criminal charges for companies or their executives, leading to criticism that it wasn’t holding financial executives to account for wrongdoing.

Since 2009, the US has brought about three dozen cases against financial firms for doing business with or handling funds linked to sanctioned countries and individuals – primarily Iran, Sudan and Cuba.

Almost all of those cases were resolved without criminal charges or through deferred-prosecution agreements, like the one reached with Standard Chartered in 2012.

Over the past few months, deputy attorney general Rod Rosenstein suggested some companies overpaid for their misconduct during the Obama administration, and put in place new policies to stop what he called a “piling on” of fines by multiple federal and state enforcers for the same behaviour – a potential issue in the Standard Chartered case given the number of agencies involved.

Under the new policy, Rosenstein said the Justice Department may credit companies for fines imposed by other authorities.

In settling the original case, Standard