A London bank, Standard Chartered, now finds itself dealing with the fallout of doing business with Iran, as it faces a potential $1.5 billion fine for letting customers violate Iranian sanctions. This figure is seen as preliminary, as final discussions regarding the matter have not been completed.
The U.S. under the Trump administration is clear that Iran is a top priority on their foreign policy agenda. Part of this agenda includes enforcement of a variety of sanctions, including the ones being renewed as part of the U.S. exit from the Joint Comprehensive Plan of Action (JCPOA). New sanctions focused on the Iranian oil and gas industry are set to begin in November.
Enforcement of these sanctions is also a priority for this administration in its attempt to force change within the regime. Meanwhile, the Iranian resistance welcomes this harder line, arguing that the regime needs to be held accountable for its actions in multiple areas.
Bank investigation focuses on 2013
The investigation is looking into events from 2013 and earlier, when Iran was last under U.S. sanctions, prior to the signing of the JCPOA. A coalition of law enforcement are involved, including the U.S. Justice Department, New York’s Department of Financial Services, and the Manhattan District Attorney. Their findings are expected to be released by the end of the year.
This investigation is not the first time that Standard Chartered has been under the eye of the U.S. government. In 2012, the bank entered into a deferred prosecution agreement (DPA) to address allegations that it had facilitated business for various Iranian parties. It also paid a $667 million fine to avoid criminal charges. That agreement was extended in 2014, and it was fined another $300 million after the independent monitor found that the bank did not have a system that adequately addressed or detected suspicious transactions. In July, the DPA was extended again, as the standard set by the U.S. regulators had not yet been met.
Drop in shares as investigation wraps up
While the investigation appears to be reaching the end, Standard Chartered is at the beginning of a potentially large financial blow. Its stocks have dipped after the potential fine number was revealed and overall in 2018, the stocks have dropped 21% in value.
The fine amount itself will depend largely on whether the bank let Iranian-linked entities move money through a Dubai unit and how much was shared with U.S. authorities. The bank has agreed to have its business practices monitored by an independent third party. Charges would be dismissed if they complied with sanctions, according to the DPA. However, the bank has not reached the standard and failure to comply could mean the case is reopened.
Standard Chartered released a statement, saying in part, “As previously disclosed, we continue to cooperate fully with the investigation regarding our historical sanctions compliance, and are engaged in ongoing discussions with the U.S. authorities.”
The bank was recently fined for breaching anti-money laundering rules by Singapore authorities and faced an accusation that they helped the Gupta family move money out of South Africa.