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Central bank says StanChart liable to legal action

August 31, 2014

BANKING GROUP Standard Chartered Plc is liable to legal action in the UAE after it agreed to close some customers' accounts in an anti-money laundering settlement with US regulators, the UAE central bank said.Under the settlement, 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.

In the UAE, between 1,400 and 8,000 Standard Chartered accounts are expected to be affected, the central bank said, adding that it would examine every account to identify any violations. 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 while Standard Chartered had not fulfilled US regulatory requirements, its UAE branches had committed "no significant violations" of international money laundering rules.

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Source: Gulf, The (Bahrain)

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