The bank's reaction follows an order passed by the New York State Department of Financial Services (DFS) on Monday night, wherein StanChart was accused of hiding over 60,000 secret transactions involving at least USD 250 billion over a period of 10 years and exposing the US financial system to terrorists, weapon dealers and drug kingpins.
Iran figures among the countries barred by the US for doing any business by individuals and entities. Refuting the charges levelled by DFS, Standard Chartered Bank said in a filing with stock exchanges in London and India, where it is listed, that the group "does not believe the order issued by the DFS presents a full and accurate picture of the facts. It strongly rejects the position or the portrayal of facts as set out in the order issued by the DFS".
The bank added, "The Group takes its responsibilities very seriously and seeks to comply at all times with the relevant laws and regulations." StanChart's Indian Depositary Receipts (IDR) tanked 14.72 per cent to Rs 88.60 on the BSE in the early morning trade. Among other charges, the DFS order also accused StanChart of deficient money laundering controls in its outsourcing of work to India. StanChart said it had made presentations to the DFS and StanChart said it had made presentations to the DFS and other US agencies concerning the strength of its global sanctions compliance programme during the period under review and through to the present day.
The bank said its analysis shared with all the US agencies demonstrates that throughout the period the Group acted to comply, and overwhelmingly did comply, with US sanctions and the regulations. The Group believes that the interpretation reflected in the DFS order, of the U-Turn exemption a federal regulation administered and enforced by federal authorities is incorrect as a matter of law, it added.
The Group's review of its Iranian payments also did not identify a single payment on behalf of any party that was designated at the time by the US Government as a terrorist entity or organisation, StanChart noted. StanChart is in ongoing discussions with relevant US agencies and resolution of such matters normally proceeds through a co-ordinated approach by such agencies, it said. The bank had voluntarily approached all relevant US agencies, including the DFS, in Jan 2010, and informed them about a review of historical US dollar transactions and their compliance with the US sanctions, it noted.
This review primarily focussed on transactions relating to Iran during 2001-2007 and their compliance with the US regulations to enable the ongoing US dollar trade with Iran by other countries, the bank added. "The Group was therefore surprised to receive the order from the DFS, given that discussions with the agencies were ongoing," it said.