When a penalty does not fit the crime it should come as no surprise that the activity in question is likely to perpetuate.
We would seem to see evidence of this reality in the ongoing “wash, rinse, repeat†cycle of money laundering activities at the laundromat heretofore known as Standard Chartered Bank.
The Financial Times peers inside this washing machine this morning to reveal the following dirty laundry:
Standard Chartered is in talks to pay up to $300m to New York’s top banking regulator to settle allegations it failed to identify suspicious transactions, despite promising to improve its procedures after it was fined for violating sanctions rules two years ago.
New York’s Department of Financial Services could announce the settlement as soon as this week, people familiar with the matter said. StanChart is also likely to agree to additional disciplinary measures, such as extending the contract of an independent monitor charged with identifying dubious transactions.
Does it strike you as odd that this independent monitor would have his contract extended? With this news it begs the question as to how effective the monitor has been to date. Perhaps a new monitor might be in order along with a “throw the bums†out cleansing of selected executives at the bank as well.
The current investigation is a follow-up to the bank’s 2012 settlement with the US authorities including the DFS, which alleged StanChart violated US sanctions laws that prohibited transactions with Sudan, Iran, Libya and Myanmar.
The penalty of up to $300m is steep for a follow-on settlement and comes close to the original DFS fine in 2012, reflecting Mr Lawsky’s position that banks that sign up to certain terms in a settlement need to abide by them.
StanChart has had a rocky history with US authorities since the 2012 sanctions settlement. Sir John irked regulators when he dismissed the bank’s actions as “clerical errors†rather than a “wilful†intention to break the rules, even though the group had accepted responsibility for breaching sanctions.
His comments earned Sir John, Mr Sands and then finance director Richard Meddings a summons to Washington, where all three were personally reprimanded by US authorities. Sir John was forced to apologise to investors and the bank’s staff, and admitted his remarks had been “both legally and factually incorrectâ€.
