Standard Chartered plc is an international banking group headquartered in London. Although British-based, much of its historic franchise has been concentrated in Asia, Africa and the Middle East, making it an especially relevant institutional comparison with BCCI. The US Department of Justice has described Standard Chartered Bank as a global financial institution headquartered in London.
Background
Standard Chartered faced extensive US investigations concerning the processing of transactions involving Iranian interests and other sanctioned jurisdictions.
The matter went beyond regulatory criticism. Criminal charges were formally filed.
In 2012, Standard Chartered entered into a Deferred Prosecution Agreement with the US Department of Justice concerning sanctions-related conduct during 2001–2007 and agreed to forfeit US$227 million.
Further conduct subsequently resulted in a new two-count felony criminal information in April 2019. One count related to the earlier conspiracy covered by the 2012 DPA, while the second concerned additional criminal conduct from 2007 through 2011.
Scale of the Conduct
For the 2007–2011 period, Standard Chartered admitted processing approximately 9,500 US-dollar transactions through the United States, totalling approximately US$240 million, on behalf of Iranian individuals and entities.
Part of the conduct involved deliberate action by former employees of Standard Chartered’s Dubai branch, who helped Iran-connected customers conceal their Iranian connections and process US-dollar transactions through the US financial system in violation of sanctions.
The case also revealed broader institutional weaknesses. According to the US Department of Justice, more than half of the approximately 9,500 US-dollar transactions resulted from deficiencies in Standard Chartered’s compliance programme, which allowed customers to request US-dollar transactions from within sanctioned countries, including Iran.
The significance of the case therefore extended beyond isolated misconduct by particular employees. It involved both intentional sanctions violations and deficiencies in the Bank’s institutional compliance systems.
Criminal Resolution
Standard Chartered was not closed.
Instead, its existing Deferred Prosecution Agreement was amended and extended. The Bank admitted and accepted responsibility for its conduct and agreed to additional cooperation, compliance measures, remediation and continuing oversight.
Under the 2019 criminal resolution, Standard Chartered agreed to:
- forfeit approximately US$240 million;
- pay a criminal fine of approximately US$480 million;
- extend and amend its Deferred Prosecution Agreement;
- continue cooperation with US authorities; and
- maintain enhanced sanctions and financial-crime controls.
Coordinated resolutions with US and UK authorities brought the overall financial consequences to approximately US$1.1 billion.
Remediation Rather Than Closure
The authorities expressly took account of Standard Chartered’s remediation and improvements to its sanctions-compliance and financial-crime systems.
The regulatory response was therefore to impose punishment, strengthen governance and controls, maintain oversight and require continuing remediation.
It was not to destroy the banking franchise.
Standard Chartered continued operating as a major international banking institution.
Comparison with BCCI
Standard Chartered is particularly relevant because, like BCCI, much of its international business was historically developed outside continental Europe and North America, with a major presence in Asia, Africa and the Middle East.
Its misconduct was serious enough to result in criminal charges, admissions, substantial forfeiture and penalties extending over more than one enforcement cycle.
Yet regulators distinguished between:
criminal violations and institutional compliance failures and the continuing viability of the wider banking organisation.
That distinction is important in considering BCCI.
BCCI’s restructuring programme was intended to make fundamental changes to governance, management, organisational structure and financial support, backed by its Abu Dhabi majority shareholders.
The existence of wrongdoing therefore did not necessarily require the disappearance of every legitimate and viable part of the institution.
The Double-Standards Question
If criminal sanctions violations involving thousands of transactions at Standard Chartered could be addressed through deferred prosecution, substantial financial penalties, continuing supervision and extensive compliance reform, why was comparable emphasis not placed on remediation and restructuring when BCCI faced serious allegations?
A wider question follows:
Why could serious misconduct at Standard Chartered be separated from the character and viability of the institution as a whole, while allegations involving particular executives, accounts and transactions within BCCI became increasingly associated with the entire Bank and its supposed institutional culture?
The comparison does not suggest that Standard Chartered and BCCI were identical cases.
It raises a narrower question of regulatory principle:
Why was continued operation under strengthened controls considered an acceptable response to serious criminal misconduct at Standard Chartered, while BCCI’s financially supported restructuring was not allowed to demonstrate whether wrongdoing could similarly be isolated and viable operations preserved?
Also read:
- US Department of Justice, “Standard Chartered Bank Admits to Illegally Processing Transactions in Violation of Iranian Sanctions”, 9 April 2019. Principal official account of the criminal information, approximately 9,500 transactions, US$240 million involved and the 2019 criminal resolution.
- US Department of Justice, “Standard Chartered Bank Agrees to Forfeit $227 Million for Illegal Transactions with Iran, Sudan, Libya and Burma”, 10 December 2012. Principal official account of the earlier Deferred Prosecution Agreement.
