The Standard Chartered Deferred Prosecution Agreement 2012: A Closer Look
In 2012, Standard Chartered Bank entered into a Deferred Prosecution Agreement (DPA) with the United States Department of Justice (DOJ) over allegations of violating US economic sanctions against Iran. The DPA allowed the bank to avoid criminal charges in exchange for paying a hefty penalty and agreeing to certain conditions to ensure compliance with US laws.
The allegations against Standard Chartered arose from a two-year investigation by US regulators, who claimed that the bank had processed billions of dollars in transactions for Iranian clients, despite knowing that such transactions were illegal under US sanctions laws. According to the regulators, the bank had deliberately concealed the true nature of these transactions from US authorities, thereby violating US laws and putting the US financial system at risk.
To settle the charges, Standard Chartered agreed to pay $340 million in fines, which were split between the DOJ, the Treasury Department and the New York State Department of Financial Services (NYDFS). The bank also agreed to certain remedial measures, including hiring an independent monitor to review its compliance with US sanctions laws, enhancing its internal controls and reporting procedures, and cooperating fully with US authorities.
The Standard Chartered DPA was seen as a landmark case in the enforcement of US economic sanctions laws, particularly given the size of the penalty and the fact that the bank had previously been viewed as one of the most compliant institutions in the world. The case also highlighted the importance of compliance in the banking industry, and the risks associated with doing business in jurisdictions subject to US economic sanctions.
Despite the settlement, the Standard Chartered case continues to be a subject of debate, particularly among critics who argue that the bank`s penalty was too lenient given the nature and extent of its violations. Some commentators have also criticized the DOJ`s use of DPAs, which allow companies to avoid criminal charges in exchange for admitting wrongdoing and agreeing to certain remedial measures.
Ultimately, the Standard Chartered DPA serves as a reminder of the importance of compliance in the banking industry, and the importance of companies taking proactive measures to ensure that they are complying with all relevant laws and regulations. While the case may have been resolved, its implications continue to reverberate throughout the banking industry and beyond.