20th Aug 2014 05:47
LONDON (Alliance News) - New York State's financial regulator has ordered UK-based lender Standard Chartered PLC to pay a civil monetary penalty of USD300 million and also take other remedial steps for its failure to improve money laundering controls that were required under its previous settlement with the regulator in 2012.
Standard Chartered's anti-money laundering transaction surveillance system at its New York branch, which is separate from the sanctions screening process, is part of the bank's overall financial crime controls. The surveillance system is designed to alert the New York branch to unusual transaction patterns that require further investigation on a post-transaction basis.
As part of the 2012 agreement, the New York State Department of Financial Services or NYDFS had installed an independent compliance monitor for the bank. The monitor's review of Standard Chartered's transaction monitoring systems found that the bank failed to detect a large number of potentially high-risk transactions for further review.
According to the regulator, a significant amount of the potentially high-risk transactions that the Standard Chartered's transaction surveillance systems failed to detect had originated from the bank's Hong Kong subsidiary as well as its branches in the United Arab Emirates, among others.
"SCB failed to detect these problems because of a lack of adequate testing both before and after implementation of the transaction monitoring system, and failed to adequately audit the transaction monitoring system," NYDFS said in a statement.
Benjamin Lawsky, Superintendent of NYFDS, said that under the order, Standard Chartered will be required to pay the USD300 million penalty, suspend dollar clearing through its New York Branch for high-risk retail business clients in Hong Kong, and also exit high-risk client relationships within certain business lines at its branches in the UAE.
In addition, the Asia-focused lender will not be able to accept new dollar-clearing clients or accounts without prior approval from the DFS, and will have to take other remedial steps.
Further, the bank will be required to provide a comprehensive remediation action plan with appropriate deadlines and benchmarks. It will also be required to retain the DFS-appointed independent compliance monitor for another two years, and appoint a "competent and responsible executive" who will report directly to the bank's CEO to oversee the remediation.
"If a bank fails to live up to its commitments, there should be consequences. That is particularly true in an area as serious as anti-money-laundering compliance, which is vital to helping prevent terrorism and vile human rights abuses," Lawsky said.
In a statement, Standard Chartered said: "The group accepts responsibility for and regrets the deficiencies in the anti-money laundering transaction surveillance system at its New York branch. The group has already begun extensive remediation efforts and is committed to completing these with utmost urgency."
The bank also said it remains fully committed to Hong Kong and the UAE as key markets, and noted that the vast majority of its clients and businesses as well as its US licenses are unaffected.
Copyright RTT News/dpa-AFX
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