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New York State Department of Financial Services' Consent Order Relating to Standard Chartered
Following on from its disclosure of 6th August 2014, Standard Chartered (“the Group”) announces it has reached a final settlement with the New York State Department of Financial Services (“DFS”) regarding deficiencies in the anti-money laundering transaction surveillance system at its New York branch.
The system, which is separate from the sanctions screening process, is one part of the Group’s overall financial crime controls and is designed to alert the New York branch to unusual transaction patterns that require further investigation on a post-transaction basis.
The settlement provisions are summarised as follows:
- A civil monetary penalty of USD300m
- Enhancements to the transaction surveillance system at the New York branch
- A two-year extension to the term of the DFS-appointed independent compliance monitor
- A set of temporary remediation measures. Specifically:
- The Group’s New York branch will not, without prior approval of the DFS in consultation with the monitor, open a USD demand deposit account for any client that does not already have such an account with the Group’s New York branch
- Within 30 days, requirements for inclusion of identifying information for originators and beneficiaries of some affiliate and third-party payment messages cleared through the New York branch
- After 45 days, a restriction on USD clearing services for certain Hong Kong retail business clients
- Within 30 days, enhanced monitoring of certain small and medium sized enterprise clients in the United Arab Emirates. The Group is seeking to exit this business 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. The exit will take place under the timeline set out in the order; if the exit is not achieved within this period, further restrictions will be required, unless an extension is granted by the DFS.
- These remediation measures will remain in place until the transaction surveillance system’s detection scenarios are operating to a standard approved by the monitor.
As the Group prepares for the implementation of these remediation measures, it will individually notify and work closely with the small proportion of clients in Hong Kong and the United Arab Emirates who will be affected to minimise disruption. The Group remains fully committed to Hong Kong and the United Arab Emirates as key markets.
The vast majority of the Group’s clients and businesses are unaffected by this settlement as are its US licences. The consent order (attached) represents a full and final settlement between the Group and the DFS of the conduct at issue.
The Group accepts responsibility for and regrets the deficiencies in the anti-money laundering transaction surveillance system at its New York branch. The Group has already begun extensive remediation efforts and is committed to completing these with utmost urgency. More broadly, the Group 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.
As was announced on 6th August 2014, oversight of the execution of this programme, the remediation of the transaction surveillance system and the effectiveness of the Group’s overall financial crime control efforts will be provided by a board-level Financial Crime Risk Committee.
For further information, please contact:
Head of External Communications
Standard Chartered Bank
Tel: ++44 7876 002 013
Head of Conduct & Compliance Communications
Standard Chartered Bank
Tel: +1 917 209 5872
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