London: Site of the 2012 Fraud Olympics

by Mercator Advisory Group 0

The London Whale, LIBOR fixing, Lloyd’s and HSBC money laundering, and now Standard Chartered, are just the latest in years of financial misdeeds occuring at banks and investment houses operating or based in London. Yesterday, we were shown the latest: a regulatory order from the New York State Department of Financial Services sent to the New York branch of London-based Standard Chartered Bank accuses the bank of dealing with Iran, Myanmar, Lybia, and Sudan in violation of U.S. international financial and trade sanctions. The 60,000 transactions with Iran totaled $250 billion over 10 years. The New York Times has in-depth coverage of the latest on Standard Chartered:

Beyond the dealings with Iran, the banking regulator said it had discovered evidence that Standard Chartered operated “similar schemes” to do business with other countries under United States sanctions, including Myanmar (formerly Burma), Libya and Sudan.

Earlier Monday, a spokesman for Standard Chartered said the bank was reviewing its “historical U.S. sanctions compliance and is discussing that review with U.S. enforcement agencies and regulators.”

But the order accuses senior executives at the bank of suppressing complaints. For example, in 2006, according to the order, the bank’s chief executive for the Americas wrote his bosses in London that the transactions had “the potential to cause very serious or even catastrophic reputational damage to the group.”

According to the order, the response was hostile, denigrated Americans and asked: “Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.” The department of financial services, led by superintendent Benjamin M. Lawsky, said it was “impossible to know” how much of the money might have been used by Iran to finance its nuclear program or to support terrorist organizations.

The BBC world service has a discussion of broader implications and additional cases in their World Business Report today, with one commentator suggesting a lax regulatory environment in the UK may be to blame.

Click here to read more from the New York Times.