Though the investigation is still on-going, does the recent New York State Department revelation on the extent of Standard Chartered’s secret money laundering scheme with Iran undermine everyone’s already shaky trust on banks and other financial institutions?
By: Ringo Bones
Despite denying the allegations, shares of standard chartered drop as much as 15% in London trading due to the recently revealed reports by the New York State Department that Standard Chartered – their New York branch - did more than 60,000 secret transactions worth over 250 billion US dollars over the last 10 years. Even more damning is the evidence showing that Standard Chartered also actively hid proof of dealings with Iran in clear violation of the established economic sanctions by the US government. Given the evidence uncovered so far, will Standard Chartered’s dubious code of conduct undermine our (as in we, the 99% with a large chunk of our pension funds probably tied-up in this financial scheme) trust in banks and other financial institutions?
Sometimes I wonder if this financial institution already got reputational risk insurance since Standard Chartered’s apparent lack of due diligence in doing their financial transactions had created conditions in which fraudulent dealings occurred during the last 10 years in clear violation of the federal government’s established economic sanctions against a designated rogue state like Iran. Truly - an unprecedented example of a moral hazard that could stain the reputation of banks and other financial institutions in the austere fiscal environment of our post global credit crunch world.
And Standard Charterd’s clear breach of economic sanctions against Iran could have far reaching financial consequences because even though the bank is UK based – it does 2/3 of its business here in South-East Asia which could cause a trading turmoil not seen since the Asian financial crisis of 1997. And given the already revealed evidence by the New York State Department, this financial cloak and dagger doesn’t have a semblance of a happy ending whatsoever.