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The US Treasury on Wednesday confirmed it was investigating Standard Chartered Bank for violating Iran trade sanctions, as US media said aggressive New
York accusations against the bank had surprised and irked federal regulators.
In a letter to the British Treasury obtained by AFP, Adam Szubin, director of the US Treasury's Office of Foreign Assets Control, said that his office "is investigating the bank for potential Iran-related violations as well as a broader set of potential sanctions violations."
Szubin told his British counterparts that the Treasury was coordinating in the investigation with other US federal and state agencies, but would not make any public comment on it until its conclusion.
It was the first official confirmation that the London-based global bank was under scrutiny from US regulators for handling large transfers by Iranian banks through its New York branch, possibly violating US sanctions on Iran.
On Monday the New York Department of Financial Services (DFS) publicly accused Standard Chartered of illegally laundering $250 billion for Iranian banks over nearly 10 years, a move that US media said surprised the DFS's federal counterparts at the Treasury, the Federal Reserve, and the Department of Justice.
The New York state regulator's move, and threat to suspend Standard Chartered's banking license in the US financial hub, was not endorsed by the Justice Department, the Fed or the Treasury, the Times said.
While all three were involved in investigating the bank's handling of US dollar transfers for state-owned Iranian banks, they differed on the size of the wrongdoing, the newspaper said.
And they were upset that DFS head Benjamin Lawsky went ahead with public accusations without them.
"Before Monday, these authorities were not expecting Mr.
Lawsky to act," the Times said, citing people close to the case.
"In money laundering cases, authorities almost always move in concert. Lawsky's order against Standard Chartered irked many of the other regulators, who questioned whether he had moved too quickly."
In his letter, addressed to Tom Scholar, second permanent secretary at the British Treasury, Szubin detailed US regulations on Iran-related transfers and noted the US had already assessed some $2 billion in fines against major foreign banks for violating them.
"These cases serve as a powerful deterrent, and we continue to investigate past conduct by offenders. We take sanctions violations by financial institutions extremely seriously," he said.
But he gave no other information on the status of the
Standard Chartered probe and no explanation of what he meant when he referred to "a broader set of potential sanctions violations" in that context.
The Times said that Treasury Department officials believe that many of the Iran-linked transactions, while questionable, "were not necessarily illegal."
It also said that both the Justice Department and the Fed were still reviewing the evidence and had not decided on whether to bring charges.
Standard Chartered has strongly rejected the accusations of the DFS, which threatened to withdraw the bank's license to operate in New York, the hub of US banking, and could lead to huge fines.
The bank said it has been cooperating with all of the regulators, voluntarily approaching them over the matter and providing massive documentation of its activities.
It said in a statement Monday that only $14 million worth of transactions-so-called U-turn deals which moved US dollars between clients through Standard Chartered's New York dollar clearing unit-did not follow US rules.
But the New York regulator said it had evidence that bank executives had schemed between 2001 and 2010 to mask massive amounts of the transfers from US regulators.
The DFS said it had evidence not only of illegal transfers for Iran but also for Libya, Myanmar and Sudan while those countries were under US sanctions as well.