Standard Chartered is facing questions from the Dubai Financial Services Authority after it is accused of concealing as much as $250 billion in transactions with Iran that violated US sanctions.
Dubai questions Standard Chartered
Regulators in the UAE are asking questions about Standard Chartered's operations in the Dubai International Financial Centre (DIFC).
The move follows allegations the UK bank concealed as much as US$250 billion (Dh918.26bn) in transactions with Iran that violated US sanctions.
The Dubai Financial Services Authority, which regulates firms operating in the DIFC, the emirate's financial free zone, said it was looking into allegations against Standard Chartered made in the week by US officials. The bank has not been accused of any wrongdoing by the DFSA. "We are currently making our own inquiries as the regulator of the branch of Standard Chartered bank in the DIFC," a spokeswoman for the DFSA said.
She declined to comment on what form the inquiries were taking or how long the process would last.
In a report by the New York department for financial services last week, Standard Chartered was alleged to have hidden $250bn in suspicious transactions involving Iran that breached US sanctions.
The bank disputes the allegations and says only $14 million did not comply.
The report said about half of the allegedly suspicious transactions were routed through the firm's Dubai office. A spokesman for Standard Chartered said the bank had contacted regulators in all the markets it operated from on the day the allegations emerged as part of routine communication between management and regulators.
"Standard Chartered is in regular dialogue with its local regulators on all relevant matters," the spokesman said. "The bank takes its responsibilities very seriously and seeks to comply at all times with the relevant laws and regulations."
The Central Bank, which regulates the British bank's onshore UAE operations, did not respond to requests for comment.
The UAE must abide by United Nations sanctions but it does not have to abide by unilateral sanctions such as those imposed by the United States or the European Union. However, those sanctions are becoming increasingly far-reaching.
The DFSA last raised the alert over the direct effects of sanctions against Iran in 2010 when EU sanctions froze the assets of Persia International Bank, which had a branch in the DIFC, and a number of individuals.
Noor Islamic Bank revealed in February this year it had cut off all relations with Iranian lenders in December. The bank maintains its exposure was through the clearing and ATM system and it had no direct business dealings with sanctioned entities. No suggestions of any impropriety have been made.
Meanwhile, global regulators yesterday increased the pressure on Standard Chartered, which faces the loss of its New York banking licence and access to US dollar-denominated trade.
The US Treasury department said its agency, which administers sanctions, is investigating Standard Chartered for "potential Iran-related violations as well as a broader set of potential sanctions violations", Bloomberg News reported, citing correspondence between the Treasury and its UK counterpart.
Meanwhile, South Korea's financial supervisory service said it would conduct spot-checks on the Korean units of Standard Chartered and HSBC, which was censured by the US senate last month for its own breaches of US sanctions. The regulator did not specify when the checks would take place.
Unlike Standard Chartered, HSBC has admitted to all of the senate's findings and made a full public apology.
Standard Chartered's London-listed shares have fallen 13 per cent to 1,363 British pence each since Monday when the allegations were first revealed but have pared losses during the past two days.
This article has been altered to clarify that inquiries are underway and that a formal investigation has not been launched.