New Standard Chartered Settlement Underscores Insufficiency of Fines & Monitoring in Deterring Illicit Activity at International Banks

August 20th, 2014


August 20, 2014

GFI Warned of Shortcomings of Original Standard Chartered Settlement in August 2012


Regulators Fail Again to Hold Individuals Accountable for Serious Anti-Money Laundering Lapses, Providing No Deterrent to Future Misconduct

WASHINGTON, DC – As New York regulators announced that British bank Standard Chartered PLC will pay a fine of $300 million for failing to rectify anti-money laundering deficiencies as required by the bank’s August 2012 settlement with New York regulators, Global Financial Integrity (GFI) warned that the agreement underscored the fact that fines and monitoring are insufficient for deterring illicit activity at international banks.

“As I noted in August 2012 when the original Standard Chartered settlement was first announced, monitoring and paltry fines are not an effective response in this case,” said Heather Lowe, GFI’s legal counsel and director of government affairs.  “In 2004, Standard Chartered was forced to submit to monitoring by regulators for significant anti-money laundering deficiencies.  The illicit activity covered in the August 2012 settlement was happening while the first round of monitoring was already in place.  Now it appears that the monitoring and fines imposed in 2012 did little to rectify the situation at Standard Chartered.  They say that the definition of insanity is doing the same thing over-and-over-again and expecting a different result.  The settlement today is a prime example of that.”

GFI explained that the government must instead hold individuals at the financial institution accountable before they can expect large banks like Standard Chartered to comply with anti-money laundering rules.

“A fine is a cost of doing business, especially when it’s $300 million—or $340 million, as it was at Standard Chartered in 2012—for $250 billion worth of transactions,” added Ms. Lowe.  “The question everyone should be asking is, ‘are the people who have been participating in the bank’s illicit activity since 2004—not just the CEO, but also the department managers—still working for the bank and why?’”

GFI further warned that this problem is not unique to Standard Chartered, but is rather a systemic problem with anti-money laundering enforcement.  The deal follows similar recent settlements with BNP Paribas, Credit Suisse, HSBC, ING, UBS, and Wachovia for facilitating money laundering or tax evasion, in which the banks paid hefty fines while their executives and employees escaped any punishment for their participation.

“Standard Chartered had multiple opportunities over the past decade to clean up its act, and they clearly and repeatedly chose not to do that,” noted GFI Policy Counsel Joshua Simmons.  “The only way to stop this from occurring again at Standard Chartered, or at any other bank, is for any of their employees who knowingly violated the law to face appropriate consequences for their actions.  There will not be substantial progress on combating money laundering through major financial institutions until individual actors within those banks feel that they will be held accountable for their actions.”


Notes to Editors:

  • Click here to read an HTML version of this press release on our website.
  • Click here to read the press release from the NY Department of Financial Services announcing the new settlement.
  • Click here (PDF) to read the full order from the NY Department of Financial Services.
  • Click here to read GFI’s August 14, 2012 press release on the original settlement, titled “GFI: Standard Chartered Settlement Insufficient to Deter Illicit Activity at International Banks.”
  • Click here to read Joshua Simmons’s January 2014 op-ed published by the Thomson Reuters Foundation, titled “An Indictment of Financial Crime Enforcement.”
  • Read Heather Lowe’s speech, “Players: The Role of Facilitators and Super-Fixers,” given on June 25th, 2012 before The Center for Complex Operations at the National Defense University, Washington DC.

Journalist Contact:

Clark Gascoigne
Global Financial Integrity
+1 202 293 0740 x222

Written by Global Financial Integrity

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