From 2001 to 2010, the management at British bank Standard Chartered (STAN) "schemed with the government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion," earning "hundreds of millions of dollars in fees" in the process. Standard Chartered moved this money for Iranian clients, "stripping" the transactions of identifying information that might indicate their source, lest regulators figure out that money laundering was going on.
So argues New York's top financial regulator, the New York State Department of Financial Services, in a case that's currently ruffling feathers from NYC to London.
The Brits' response?
According to Standard Chartered, everything it did was 100% legal (well, 99.9%). U.S. law permits keeping client identities secret so long as a banker conducts "strong due-diligence," and Standard Chartered avers that it did this on "99.9%" of the transactions in question.
Now, maybe Standard Chartered did that. Maybe the bank invested the man-hours necessary to diligently check the legality of these tens of thousands of suspect transactions. But Standard Charter's claim that it dotted every 'i' and crossed every 't' doesn't jibe with the sentiments expressed in an email the bank's Executive Director sent to its U.S. branch head in 2006 (in the middle of all the skullduggery).
These sound more like the words of someone trying to defend not conducting due diligence, than the words of someone calmly confirming that the checks and balances are in place, and all is well.
As for the objection itself ... does anyone else think the banker doth protest too much? New York regulators actually have every right to set conditions for a bank wishing to do business within the state. That's kind of their job.
Moreover, enforcing sanctions on Iran isn't just an American idea. Just last year, UK Chancellor of the Exchequer George Osborne (the British version of secretary of the treasury) announced sanctions against Iran's Central Bank, responding to International Atomic Energy Agency reports that Iran was "engaged in nuclear activities with military applications." As recently as February, the Brits were pushing the United Nations for tougher sanctions. Why, in November, Britain's Guardian newspaper reported the UK Defense Ministry was making plans for how it would bomb Iran!
Maybe next time Standard Chartered should peruse its government's "to-bomb" list before tossing its "F-bombs" across the Pond.
Motley Fool contributor Rich Smith holds no position in any company mentioned. The Motley Fool owns shares of Standard Chartered.