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Standard Chartered liable to legal action: UAE Central Bank

August 22, 2014



The British-based bank will be liable to legal action by the account owners "because of the material and moral damage which is falling on them", the central bank said.



Banking group Standard Chartered is liable to legal action in the UAE after it agreed to close some customers' UAE accounts in an anti-money laundering settlement with US regulators, the UAE Central Bank said on Thursday.







Under the settlement, announced on Tuesday, the bank agreed to pay a $300 million fine, end high-risk relationships with small- and medium-sized business clients in the UAE, and suspend the processing of dollar-denominated payments for some clients at its Hong Kong unit.







The threat of further legal action in the UAE is a further complication for StanChart Chief Executive Peter Sands, who is fighting to retain the backing of investors after a series of transgressions and a decline in the bank's earnings.







"We have noted the announcement made by the UAE Central Bank. We always work with our regulators to achieve the right outcomes," the lender said in an e-mailed statement.







Shares in the bank were down one per cent by 1415GMT.







Under the said Consent Order, the bank was fined and is subject to certain procedures for not fulfilling the requirements of the New York State Department of Financial Services, among which closure of accounts relating to persons and companies holding nationalities that cannot transfer funds or deal in US dollar, as per the US law.







It is worth pointing out that the account numbers classified as such range from 1,400 to 8,000 accounts maintained at the bank branches in the UAE.







The central bank formed a team to review the records of accounts of these companies and their owners, to identify the violation as recoded in New York on every one of them.







The British-based bank will be liable to legal action by the account owners "because of the material and moral damage which is falling on them", the central bank said.







It added that its Consumer Protection Unit was willing to consider complaints from affected account holders. However it did not say if it believed any action was likely by account holders.







The central bank said that while Standard Chartered had not fulfilled US regulatory requirements, its UAE branches had committed "no significant violations" of international money laundering rules, such as the standards of the Financial Action Task Force, an inter-governmental body.







Standard Chartered said on Tuesday, after the settlement was announced, that it was in any case seeking to leave the business of serving small- and medium-sized clients in the UAE as part of a broad effort to sharpen its strategic focus.







"The UAE remains one of Standard Chartered's leading franchises globally and the move does not reflect a decreased focus on the country," it said in a statement.


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Source: Khaleej Times (United Arab Emirates)


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