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August 15, 2012

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John

My reactions exactly when news first broke out about NY regulators blaming SCB. But reading through your post, I suppose its obvious that they (SCB) couldn't get too far in terms of getting away with it.

Firstly USD is the global reserve currency and secondly the SWIFT processing means that the transactions had to pass via the US soil.

While it does irk me that the US is starting to get nosy in to just about all aspects of business, do we have a choice really? Well until China comes of age, we'll have to live with this and many more I reckon.

Will

Chris —

As one of your favorite Americans, I suppose that I have to respond to the individual in the Stand. Chart. New York office …

We do not care what you do with Iran. You can deal with them in any and every way you want. But, do not, repeat NOT, try and circulate the money transfers through your branch in New York and expect that you will be able to do so with impunity. Circulate the movements through London, Hong Kong, Singapore, or Johannesburg, for all we care.

But, not only did you do the transfers, you did so intentionally, and you attempted to do so with all fraudulent intent. You tried to break our laws, on our shores, and hide in the process. No one in the U.S. forced you to use our currency for your trades. Use the bloody Renminbi for all we care. But, if you use our currency, and a branch in the U.S. to effectuate your fraud, then expect that people will be looking, and (if they catch you) you will be punished.

Make your choice … do the crime … do the time (or pay the fine)!

Chris Skinner

@John thanks and agreed

@Will also agree, just that the approach should be equitable and fair, which this was and is not.

David Blenkinsop

Chris, your points are well made. I would just add that it is amazing how the Americans only discovered money laundering after 9/11. I seriously believe that before that, it was rife in America.

IanP

I'm sorry, this is crap. It may be credible if the Iranians were really good guys and the US was really doing everything out of some unreasonable backing of Israel, or if the world would be a better place have China, with it's human rights record, as the dominant country and international policeman.

However, Iran is a genuine threat to the world... not because of Israel but because they are nutters - or at least their leadership is. And the only way to have any chance of keeping them in check is financial. And all non-political reasonable people appear to agree that they need to be kept in check. The world needs a policeman because the UN is morally bust, and the US is the only country capable of doing the job. And when China eventually accedes to the role, do we think things will really be better based based on their human rights record? The hell it will.

Stopping these nutty Iranian bastards is dirty work and someone has to get it done. I vote for a little collateral damage in the banking system being an acceptable cost.

Chris Skinner

@david exacta mondo

@ianp amazing how many people are duped by Western propaganda to be so anti a country they know little about. It may be their leaders are at issue, but the country itself? Note: the Arab Spring.

MarkMixter

So let me see if I understand this Standard Chartered defense -- there's no crime because US sanctions against Iran are wrong?

Chris Skinner

It's more to do with the balance of interests Mark.


Importantly, the US sanctions against Iran are not wrong in the US, EU and UN view, but the question raised is:

* when did the US introduce these rules,
* when did they apply to financial transactions,
* when did they apply to financial transactions processed through non-US companies (SWIFT) and
* when did the position gain UN and EU backing, rather than a US sole position.

You shouldn't contravene a country's laws, which StanChart admit they did with the USA. However, you are allowed to operate within those laws until those laws change, and the question is more to do with what changed when.

For example, information stripping Iran-based bank details from a SWIFT message was fine until the law changed that meant that cover payments had to be tracked through SWIFT so that US could see where these originated.

That is why StanChart had issue with the volume of transactions - 60,000 worth $250 billion versus 300 worth $14 million.

Finally, StanChart added the additional defense that some of these transactions were by people with dual nationality. So they may perform an account opening with a Saudi or Turkish or other passport, whilst actually transacting as an Iranian-born or Syrian or other nationality. That is not easily traced.

It's also worth noting that the view over here is that Lawsky held StanChart to ransom, and it set a dangerous precedent. Read this Economist piece if you want to know more: http://www.economist.com/node/21560583?fsrc=rss|fec

"This odd episode is disturbing for bigger reasons. The bank’s initial reaction to the charges was one of indignant denial. If that was merely bluster, the DFS settlement leaves much to be desired in as much as it extracts money from Standard Chartered’s shareholders but imposes no consequences on the people in charge. If the bank’s initial response was justified, however, this settlement is arguably even worse. For that would suggest that when faced with incendiary charges by a critical regulator, and the potential loss of its licence, Standard Chartered felt it had no choice but to pay up. Extracting payments through threats is usually seen as extortion. That a government agency might be the one playing this role is rightly a concern to the whole industry."

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