By: James W. Kraus
DOJ announced yesterday that it has entered into a deferred prosecution agreement (DPA) with Standard Chartered Bank, a financial institution headquartered in London, to resolve potential charges relating to Standard Chartered moving more than $200 million through the U.S. financial system on behalf of sanctioned Iranian, Sudanese, Libyan and Burmese entities, in violation of the International Emergency Economic Powers Act (IEEPA). As part of the agreement, where it agreed to forfeit $227 million to the U.S., Standard Chartered also entered into a separate DPA with the New York County DA’s Office, and separate settlement agreements with the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Board of Governors of the Federal Reserve System. As part of the DPA with the U.S., a criminal information was filed in the U.S. District Court for the District of Columbia, charging Standard Chartered with one count of knowingly and willfully conspiring to violate IEEPA.
According to the government, Standard Chartered operates a branch in New York that provides wholesale banking services, primarily U.S. dollar clearing for international wire payments. The New York branch also provides U.S. dollar correspondent banking services for Standard Chartered branches in London and Dubai. According to court documents, from 2001 through 2007, Standard Chartered violated U.S. and New York state laws by moving millions of dollars illegally through the U.S. financial system on behalf of Iranian, Sudanese, Libyan and Burmese entities subject to U.S. economic sanctions. The government alleged, and Standard Chartered acknowledged, that Standard Chartered knowingly and willfully engaged in this criminal conduct, which caused Standard Chartered’s branch in New York and unaffiliated U.S. financial institutions to process over $200 million in transactions that otherwise should have been rejected, blocked or stopped for investigation under the Office of Foreign Assets Control regulations relating to transactions involving sanctioned countries and parties.
The government further alleged that Standard Chartered engaged in this criminal conduct by, among other things, instructing a customer in a sanctioned country to represent itself using Standard Chartered London’s unique banking code in payment messages, replacing references to sanctioned entities in payment messages with special characters and deleting payment data that would have revealed the involvement of sanctioned entities. This conduct occurred in various business units within Standard Chartered in locations around the world, primarily London and Dubai, with the knowledge and approval of senior corporate managers and the legal and compliance departments at Standard Chartered. It was also acknowledged that, in addition to evading U.S. economic sanctions, Standard Chartered made misleading statements to regulators to further conceal its business with sanctioned countries.
DOJ will recommend the dismissal of the information in 24 months, provided the bank fully cooperates with, and abides by, the terms of the deferred prosecution agreement.