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Standard Chartered Agrees USD300 Million Settlement With US Regulator

August 19, 2014

Hana Stewart-Smith

LONDON (Alliance News) - Standard Chartered PLC said late Tuesday it has agreed a USD300 million settlement with banking regulator the New York State Department of Financial Services over deficiencies in the anti-money laundering transaction surveillance system at its New York branch.

Standard Chartered said it "accepts responsibility for and regrets" the deficiencies.

In addition to the penalty, the settlement also calls upon Standard Chartered to make enhancements to the transaction surveillance system at the New York office and a two-year extension to the term of the Department of Financial Services-appointed independent monitor.

The agreement also will put in place a set of temporary remediation measures. Standard Chartered'sNew York branch will not, without prior approval of the Department of Financial Services in consultation with the monitor, open a US dollar demand deposit account for any client that does not already have such an account at the branch.

Within 30 days it is required to include identifying information for originators and beneficiaries of some affiliate and third-party payment messages cleared through the branch.

Also within 30 days, it is requires to provide enhanced monitoring of certain small- and medium-sized enterprise clients in the United Arab Emirates. The bank said it is seeking to exit this business anyway as part of its "broader efforts to sharpen its strategic focus, withdrawing or re-aligning non-strategic businesses, including those where increased regulatory costs and risks undermine their economic viability."

If the exit is not achieved within the timeline set out in the consent order, further restrictions will be required, Standard Chartered said, unless an extension is granted by the Department of Financial Services.

After 45 days it is required to put a restriction on US dollar clearing services for certain Hong Kong retail business clients.

These measures will remain in place until the transaction surveillance system's detection scenarios are operating to a standard approved by the monitor, Standard Chartered said.

The company said that as it prepares for the implementing of these remediation measures, it will individually notify and work closely with the small proportion of clients in Hong Kong and the UAE who will be affected to minimize disruption. It said that it remains committed to Hong Kong and the UAE.

It said that a vast majority of its clients and businesses are unaffected by this settlement, as are its US licenses.

Standard Chartered added that more broadly it is "committed to enhancing its effectiveness in the fight against financial crime, and in this context, has committed substantial resources to a multi-year Financial Crime Risk Mitigation Programme."

Shares in Standard Chartered closed up 0.5% Tuesday at 1,219.74 pence.

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Source: Alliance News

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