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Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


FCPA Blog Daily News

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Thursday
Aug072014

StanChart faces New York action for high-risk transactions

Two years after state and federal authorities punished British bank Standard Chartered for doing business with sanctioned countries like Iran, it has once again become the subject of an investigation for failing to weed out other risky transactions.

New York State’s Department of Financial Services (NYDFS) is preparing an action against the bank over breakdowns in a computer system that was supposed to detect transactions vulnerable to money laundering, the New York Times said Tuesday.

The suspected computer breakdowns were detected by an independent monitor who has been sifting through Standard Chartered’s records in recent months.

The monitor, sources told the New York Times, detected millions of transactions that Standard Chartered should have flagged for further review, although it was unclear whether any of the wire transfers were actually illegal.

As part of its pact with Standard Chartered, NYDFS installed Ellen Zimiles, a former federal prosecutor in Manhattan, as a monitor. She's now head of the consulting firm Navigant’s global investigations and compliance practice.

Zimiles reportedly found that the bank’s computer systems did not flag wire transfers flowing from areas of the world considered vulnerable to money laundering and some potentially high-risk transactions were not flagged at all.

As part of the potential settlement with Standard Chartered, NYDFS chief Benjamin Lawsky is seeking to extend the duration of the monitor’s oversight, the sources said.

Lawksy's office fined Standard Chartered $340 million for the original sanctions violations in August 2012.

StanChart is expected to disclose the latest investigation when it announces its earnings on Wednesday.

The bank’s chief executive, Peter Sands, made several trips to New York in recent months to meet with Lawsky’s team, those sources said, reports said. Sands told regulators the computer errors were technical problems rather than deliberate attempts to flout the law.
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Julie DiMauro is the executive editor of FCPA Blog and can be reached here.